Forex markets - trading internationally
Forex market trading is trading money, currencies worldwide. Most all countries around the world are involved in the forex trading market, where money is bought and sold, based on the value of that currency at the time. As some currencies are not worth much, it is not going to be traded heavily, as the currency is worth more, additional brokers and bankers are going to choose to invest in that market at that time.
Forex trading does take place daily, where almost two trillion dollars are moved every day - that is a huge amount of money. Think about how many millions it does take to bring about a total of a trillion and then consider that this is done on a daily basis - if you want to get involved in where the money is, forex trading is one 'setting' where money is exchanging hands daily.
The currencies that are traded on the forex markets are going to be those from every country around the world. Every currency has it own three-letter symbol that will represent that country and the currency that is being traded. For example, the Japanese yen is the JPY and the United Stated dollar is USD. The British pound is the GBP and the Euro is the EUR. You can trade within many currencies in one day, or you can trade to a different currency every day. Most all trades through a broker, or those any company are going to require some type of fee so you want to be sure about the trade you are making before making too many trades which are going to involve many fees.
Trades between markets and countries are going to happen every day. Some of the most heavily trades occur between the Euro and the US dollar, and then the US dollar and the Japanese yen, and then of the other most often seen trades is between the British pound and the US dollar. The trades happen all day, all night, and thought out various markets. As one country opens trading for the day another is closing. The time zones across the world affect how the trading takes place and when the markets are open.
When you are making a transaction from one market to another, involving one currency to another you will notice the symbols are used to explain the transactions. All transactions are going to look something like this EURzzz/USDzzz the zzz is to represent the percentages of trading for the percentage of the transaction. Other instances could look like this AUSzzz/USD and so on. When reading and reviewing your forex statements and online information you will understand it all much better if you are to remember these symbols of the currencies that are involved.
Introduction To Forex
I'm sure you've already heard of Forex trading. it is one of the hottest topics around these days. But what exactly is it and how can the average Joe make money in Forex?
Forex, also called "FX", is short for foreign exchange. The foreign exchange doesn't get the big press like stocks, options, and commodities. But the foreign exchange is the biggest market in the world and it offers investors an incredible opportunity for profit.
When you trade on the foreign exchange, you don't trade in stocks or bonds, but in currency. Simply put, Forex trading is just the buying of one currency and the selling of another. As exchange rates go up and down, you either make or lose money.
With Forex, you're not investing in a single company or even a group of companies. You're investing in the economy of nation. You are betting that the overall economic health of one nation will improve in relation to that of a second nation.
For example, let's say you are analyzing the US Dollar and the Japanese Yen. Your research seems to indicate that the US dollar is undervalued and is due for a rise in price, and at the same time you expect the Japanese Yen to lose value. In this case you would execute a trade to buy US dollars and sell Japanese yen. If you are correct and the exchange rate rises, you make a profit!
So its a piece of cake, right? Well no, not really. Currency prices can be incredibly difficult to forecast because there are so many factors that can contribute to a change in exchange rates. And you must remember that in currency trading you always trade in pairs. You buy one currency and sell another. So you can't just look at one nation's economy; you must look at two.
Of course, you do not have to limit yourself to only one pair of currencies. There are dozens of different currencies to choose from. But if you are just starting out, I suggest sticking to the seven major currencies:
USD - US Dollar
EUR - Euro
GBP - British Pound
JPY - Japanese Yen
CHF - Swiss Franc
AUD - Australian Dollar
CAD - Canadian Dollar
Most small investors concentrate their trading on just these seven currencies.