What is Forex?
FOREX (FX) is an acronym for Foreign Exchange: It is a market where currencies are traded against each other.
It is the biggest financial market in the world, with a daily trading volume of more than $6.6 trillion.
The forex market is a decentralized market that is run electronically within a network of banks, hence there is no specific central office. This feature is what makes it a fully 24 hours a day, 5 1/2 days a week market.
Forex trading is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs: For example – Euro/US Dollar (EURUSD) or Pound/US Dollar (GBPUSD)
The objective of forex trading is to exchange one currency for another in the expectation that price will change so that the currency you bought will appreciate in relation to the one you sold.
Why does price fluctuate?
The simple answer is “Demand and Supply”
Just like in business and sales – the more the demand, the more expensive the item gets because more people want it and so the price goes up
Similarly, if there is more supply than demand, the price drops.
So the more in demand a currency is, the higher the price will go and vice versa.
Things like economic policies, political issues, or even things like natural disaster may make a currency more appealing or less appealing to investors. Price are also affected by technical patterns on the chart
Advantages of trading Forex:
Flexibility
- The Market is Open 24 Hours / day – Which makes it great to work around your existing commitment
- No Trading Restrictions
- Any Sized Account
- Can Provide Long and Short-Term Income
Liquidity
- The most Liquid Financial Market
- Instantly get in and out of trade
- No Time Limit
- No Waiting
- No Penalties
- You can hold a position for seconds, minutes, hours, days weeks or months
Simplicity
Low requirements to trade Forex, all you need is:
PC or mobile phone
Internet connection
Flexible Startup Capital
Reliable Broker
Size
Huge daily trading voulume – $6.6 Trillion
Good potential for opportunities