You often hear and read a great deal about the Forex Market, be it on the news or among business associates and friends. The Forex or the Foreign Exchange Market also known as FX is the largest and most competitive market in the world by volume with over an average daily turnover of $ 3 Trillion, no other market in the world has that kind of daily volume. It is an auction-based entity much like the stock market, simply put it is the buying and selling of different currencies in order to profit from changes in currency exchange rates.
Any country, that issues currency can trade currency in the Forex Market, however, not all currencies are created equal though there are certain currencies, which are more liquid than others, like the US Dollar, which makes up the bulk of the trade, with almost 85% of the trade containing this currency. Other popular currencies are the Japanese Yen, the Euro, the Pound Sterling, Australian Dollar, the Swiss Franc and the Canadian Dollar to name a few. These currencies have a strong market for demand and forex brokers can easily trade, either to buy or sell these currencies.
One of the main attractions for investors in Forex trading is that it is widely considered as the most liquid of the world’s financial market. Most markets like the stock market would require investors to make an investment then wait for weeks, months or years to see if an investment yields revenue. The Forex Market due to its liquidity, profits can be made within minutes of Forex trading. A return of investment can easily be made which makes it popular among investors.
It also has become increasingly more popular due to the introduction of Internet based currency trading.
An investor can choose from many different forex-trading platforms on the internet that the investor can open an account with. These forex trading platforms also offers a practice account that an investor could use to make simulated trades without risking any real money to see how they would do in the real Forex market. This kind of opportunity is not available for stock markets and brokers.
There is no central exchange like in conventional markets, virtually all forex transactions are done online through a network of financial institutions, forex brokers and traders. Making it far more convenient and easier for forex broker and traders to monitor and buy and sell their currency. Forex traders do their transactions online using specialized trading software and real-time currency exchange quotes, like the Metatrader and Metrader 4. Most trades are usually done and settled within one or two days.
Remember that even if there is huge potential in profits you should keep in mind however, that online currency trading is extremely risky and should only be pursued as an investment option after having carefully done research on the market.