Forex: Forex Market: What You Need To Know

By: Dori Thompson

As a trader who does business in the forex market, there are a lot of things that you need to know in this kind of niche and you'll need to understand how this market really works if you are to become a successful trader. I'm sure you'd already come across several different terminologies for this market: Forex and fx (which are both shortcuts for foreign exchange), currency trading market, currency market, and lots more. By definition, the forex market is an international market wherein the currencies of the world are being traded and as well as being exchanged.

The market involves every country in the world, so there's always the possibility of trading and exchanging currencies with most of the nations. That's why it runs almost on a daily basis, 24 hours a day and five days a week, starting 5pm EST (Sunday) and concludes at 4pm EST (Friday), New York. And within that period of time, currencies are being exchanged and traded from country to country.

The market began when the U.S. abandoned the gold standard (which gave every currency a value related to the U.S. dollar and was introduced for the purpose of stabilizing the world economy back then) and the values of all the other currencies had undergone change, with the banks opting to exchange currencies for profit (buying low and then selling high), rather than just being a passive means of transferring and exchanging money from one country to another country (and this made each currency a commodity that can be traded from then on).

Common exchanges/trading involve the U.S. dollar against other currencies like the British pound, euro, Australian dollar, Japanese yen and Swiss franc, but it's always possible to trade any of these currencies with one another. The value of a currency is directly proportional to the value of the nation, and what this means is that if one nation becomes successful its currency increases in value, while on the other hand, if it is undergoing crisis, the value decreases. Take note that these fluctuations can be huge and will happen very quick, with the sums of money involved being huge. Nowadays, the total worth transactions in the market is almost around $2 trillion dollars per day.

Major corporations, international banks, investment banks and other large financial institutions govern the market, but it is possible for a private individual to trade in the market through brokers (with the rise of the Internet, this has become very common nowadays). Many who are involved in forex trading do business through their own PC at the comfort of their own homes (and they compose around 2 percent of the overall forex market). The forex robots/systems used by these individual traders concentrate on lesser pairs, like the British pound against the euro.

One can say that the forex market is a huge place, which will dwarf an individual trader. But as long as you have a little capital that you'd be willing to risk, then you can get into it. Some brokers will let you begin with a little amount of $250. But for beginners, there's always the forex demo account that will serve as your practice and for you to learn the basics regarding the market, before investing any real cash and diving into the real thing.

About the author:

In forex trading, what a trader needs are the tools that can help him do trading with much profits and success as he can in the market. Utilizing these tools will give him a winning edge in trading forex.Go and check out the tools that you need from Dori Thompson so you too can gain as much profits as you can in forex trading. Act now by clicking on this link Forex Trading Tools.