Introduction to Foreign Exchange Markets

8/8/2019 Introduction to Foreign Exchange Markets

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:: Introduction to Foreign Exchange Markets

Being the main force driving the global economic market, currency is nodoubt an essential element for a country. However, in order for all thecountries with different currencies to trade with one another, a system ofexchange rate between their currencies is needed; this system, is formallyknown as foreign exchange or currency exchange.

In the early days, the system of currency exchange is supported solely by thegold amount held in the vault of a country. However, this system is nolonger appropriate now due to inflation and hence, the value of onescurrency nowadays is determined through the market forces alone. In orderto determine the value of a currencys exchange rate, two main types ofsystem is used which is floating currency and pegged currency.

For floating exchange rate, its value is determined by the supply and demandof the global market where the supply and demand is bound by all thesefactors such as foreign investment, inflation and ratios of import and export.

Normally, this system is adopted by most of the advance countries like forexample UK, US and Canada. All of these countries have a similarity wheretheir market is well developed and stable in economic terms. These countrieschoose to practice this system due to the reason where floating exchange rateis proven to be much more efficient compared to the pegged exchange rate.The reason behind this is because for floating exchange rate, the market

itself will re-adjust the exchange rate real-time in order to portray the actualinflation and other economic forces. However, every system has its ownflaw and so does the floating exchange rate system. For instance, if a countrysuffers from economic instability due to various reasons such as politicalissues, a floating exchange rate system will certainly discourage investmentdue to the high risk of suffering from inflationary disaster or sudden slumpin exchange rate.

Another form of exchange rate is known as pegged exchange rate. This is asystem where the value of the exchange rate is fixed by the government of acountry and not the supply and demand of the market. This system is called

pegged exchange rate because the value of a countrys currency is fixed toanother countrys currency. As a result, the value of the pegged currencywill not fluctuate unlike the floating currency. The working principle behindthis system is slightly complicated where the government of a country willfixed the exchange rate of their currency and when there is a demand for a


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certain currency resulting a rise in the exchange rate, the government willhave to release enough of that currency into the market in order to meet thatdemand. However, there is a fatal flaw in this system where if the peggedexchange rate is not controlled properly, panics may arise within the countryand as a result of that, people will be rushing to exchange their money into amore stable currency. When that happens, the sudden overflow of thatcountrys currency into the market will decrease the value of their exchangerate and in the end, their currency will be worthless. Due to this reason, onlythose under-developed or developing countries will practice this method as aform to control the inflation rate.

However, the truth is, most of the countries do not fully practice the floatingexchange rate or the pegged exchange rate method in reality. Instead, theyuse a hybrid system known as floating peg. Floating peg is the combination

of the two main systems where one country will normally fixed theirexchange rate to the US Dollars and after that, they will constantly reviewtheir peg rate in order to stay in line with the actual market value.

The Foreign exchange market, or commonly known as FOREX, is thelargest and most prolific financial market because each day, more than 1trillion worth of currency exchange takes place between investors,speculators and countries. From this, we can deduce that the actualmechanism behind the world of foreign exchange is far more complicatedthan what we may already know, and that, the information mentioned earlier

is just the tip of an iceberg.

:: Forex Margin Trading

Comparing to other investment, the Foreign Exchange margin trading is oneof the fairest and the most attractive investment method.The Foreign Exchange margin trading meaning the traders borrow loan from

bank, finance organization or broker house to carry on the foreign currencytrading. Generally, the financing proportion is above 20 times, which meansthe Forex traders fund may enlarge to 20 times to carry on the trading. The

bigger the financing proportion, means the Forex traders just need to payvery less fund, for example, the financing proportion provided by thefinancial organization is 400 times, namely the lowest margin request is0.25%, the traders just need to pay 25 US dollars, then he or she could tradeas high as 10,000 US dollars, fully using the contra method to make big

profit by only paying a very less price.


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Besides the fund enlargement, another attraction of the Forex margin tradingmethod is that it can be traded in both ways, you can make profit by buyingthe currency when the currency rise (makes many), or to sell a currencywhen the currency is dropping to make profit (short-selling), thus does notneed to be restricted by the restriction so-called bear market is unable tomake money.Making Profit in the Foreign Exchange Market

The currency fluctuate continuously due to reasons such as political,economical reasons, sometimes the changes could be extremely great,therefore, the Forex traders also can have the opportunity in among whichmakes a profit. For example, the Japanese Yen daily fluctuation is probably

between 0.7% to 1.5%, Forex traders may make profit through buying andselling. All trading could be completed in a short time, the trading strategy

could be carry up according to the market conditions, it is extremelyflexible, even if the direction looks wrong, the lost could be stopimmediately, the lost could reduce but profit potential is still great.Therefore, the Foreign Exchange margin trading is the most flexible and themost reliable investment method.Foreign Exchange Margin Trading elementary knowledge

Currency name Commonly used currency code

Singapore dollarThai Bath

Swedish kronaDanish Krone

Norwegian kroneSpanish pesetaGerman MarkUS dollarEuroJapanese YenPound

Swiss francAustralian dollarNew Zealand YuanCanadian dollarHong Kong dollarFrench francItalian lira

SGDTHB

SEKDKK

NOKESPDEMUSDEURJPYGBP

CHFAUDNZDCADHKDFRFITL


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Belgian franc BEF

:: The Foreign Exchange Rate

In the international market, the Foreign Exchange rate is demonstrated by

five numerals, for example:

EUR/USD 1.2653USD/JPY 107.65GBP/JPY 195.03

The Exchange Rate Change

The exchange rate smallest change for the final figure (is 1 pip), forexample:

The EUR/USD smallest change is 0.0001USD/JPY smallest change is 0.01

Quoted Price

All quoted prices can be divided into direct quoted price and the indirectquoted price, for example:

The direct quoted price currency includes: EUR/USD, GBP/USD,

AUD/USD, NZD/USD ......The indirect quoted price currency includes: USD/JPY, USD/CHF,USD/CAD ....

For example, the EUR/USD quoted price is 1.2653, which means each eurocould convert to 1.2653 US dollars, while the USD/JPY quoted price is107.65, which means that each US dollar could convert to 107.65 JapaneseYen.

The buying price and the selling price of the foreign currency is decided by

the bank or the broker house, customer decides only the buying trend. Forexample, the EUR/USD quoted price general demonstration is 1.2652/57,which means the broker house is willing to buy Euro dollar at the price of1.2652, and sell at the price of 1.2657. At this time, the price difference

between the buyer and the seller (pip difference) is 5 pips, for foreignexchange trading, the smaller the point means the trading cost is lower andthe chance of profit making is much larger.


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:: Foreign Exchange (Forex) Market

Presently, there are various kinds of financial market, it is divided into:Stock market, interest market (including bond, commercial bill and so on),gold market (including gold, platinum, silver), futures market (includinggrain, cotton and kapok, oil and so on), option market and foreign exchangemarket or forex market and so on.

The foreign exchange market is a place to trade foreign exchange currency,or it is also a place for the transaction of all foreign currency. The foreignexchange market therefore is existence, because of:

Trade and investment

Import and export business, people pays one kind of currency when doingbusiness, but when earns another kind of currency when receive the

commodity. This means that, when settling account, business people willpay and receive different currencies. Therefore, they must convert thecurrencies that they received into the currencies that they could buycommodities. With this similar, when buying a foreign property a companymust use the concerned country's currency to make payment, therefore, itneeds to convert the domestic currency is concerned country's currency.

SpeculationCurrencies exchange rates could fluctuate according to the demand andsupply between two currencies. A Forex trader buys up one kind of currency

in an exchange rate, but up casts this currency in another more advantageousexchange rate, he may gain. Speculation has occupied most of the Forexmarket.

HedgingDue to the fluctuation between two currencies, those companies who ownsforeign asset (for example factory), when these companies convert these

properties into cost country currencies, there consist of certain risks. Whenthe value of a foreign asset which is estimated based on foreign currencies

remained unchanged, if the exchange rate changes, when converting thisproperty value according to the domestic currency, there could be profit andloss. The company may eliminate such hidden risk through hedging. Thiscarries out a foreign currency trading, its transaction result justcounterbalances the foreign currency property profit and loss which

produces by the exchange rate change.


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Forex Market DevelopmentThe history of the Forex market as an international capital speculationmarket is much shorter compared the stock, the gold, the stock, the interestmarket, but it is developing in an astonishing speed. Today, the foreignexchange market daily trading volume has amounted to 150 billion USdollars, its scale has gone far beyond the stock, the stock and other financecommodity markets, it has became the world's most biggest sole financemarket and the also the speculation market. Since the birth of the foreignexchange market, the fluctuation of the exchange rate of the Forex market is

becoming bigger. In September 1985, 1 US dollar exchanged 220 JapaneseYen, but in May 1986, 1 US dollar only could exchange 160 Japanese Yen,in 8 months, the Japanese Yen has revalued 27%. In recent years, the foreignexchange market wave amplitude has been bigger, on September 8, 1992, 1

pound exchanged 2.0100 US dollars, on November 10, 1 pound exchanged

1.5080 US dollars, in the short two months, the pound exchanged US dollarexchange rate to fall more than 5,000, depreciated 25%. Not only that,

presently, everyday the fluctuation of the exchange rate of the Forex marketenlarges unceasingly, within a day the rise and drop 2% to 3% is commonlyseen. On September 16, 1992, the pound exchanged US dollar from 1.8755to fall to 1.7850, the pound on first lowers 5%.

Due to the large fluctuation of the Forex market, it has created moreopportunities for the investor, attracted more and more investors to join thisranks.

:: Characteristics of Forex Market

In recent years, the foreign exchange market could favor more and morepeople, it becomes a favorite for the international investors, and this isstrongly related to the characteristics of the Forex market. The maincharacteristics of the foreign exchange market are:

1st, It consists market but no trading fieldThe finance industry in the western countries consist two sets of systems,namely the centralism business central operation and there is no fixed placefor such business network. Stock trading is being traded through stockexchange. Like the New York Stock Exchange, the London stock market,the Tokyo stock market, respectively is American, English, the Japanesestock main transaction place, it is a centralism business financialcommodity, its quoted price, the transaction time and hand over to the


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procedure all consist of unification the stipulation, and has established thesame business association, it has formulated the same business rules. Theinvestor could buy and sells the commodity through the broker company,this is known as "consist of trading market and trading field".

But foreign exchange business is done without any unification operationmarket and business network, it has no centralism unified place like thestock transaction. But, the foreign currency trading network actually isglobally, and it has formed a organization which has no formal organization,the market is relied through an approval way and the advanced informationsystem, Forex traders do not consist any membership qualification for anyorganization, but must obtain colleagues trust and approval. This kind ofForex market which has no trading field is known as "consist of market butno trading field". Each day, the trading volume in the global Forex market

involves billions of U.S dollars, the so huge large amount fund, is beingcontrol under both the non-centralism place and non central governancesystem, plus it is settle based on non-government governance.

2nd, Circulation workDue to the different geographical position of the various financial centre, theAsian market, the European market, the Americas market because of thetime difference relations, it has become an entire day 24 hour continuedoperation whole world foreign exchange market.

Early morning 0830 (New York time) New York market opens, 0930Chicago market opens, 1830 Sydney opens, 1930 Tokyo opens, 2030 HongKong, Singapore open, before dawn 1430 Frankfurt opens, 1530 o'clockLondon market opens. So 24 hours uninterrupted movements, the foreignexchange market becomes a day and night market, only on Saturday, Sundayas well as the various countries' significant holiday, the foreign exchangemarket only then can close.

This kind of continued operation, provided no time and spatial barrier idealoutlet for investors, the Forex trader may seek the best opportunity to carryon the transaction. For instance, Forex trader buys up the Japanese Yen inthe morning at the New York market, in the evening Hong Kong marketopens the Japanese Yen rises, the Forex trader sells in the Hong Kongmarket, no matter Forex trader in where, he all may participate in anymarket, any time business. Therefore, the foreign exchange market may sayis does not have the time and the spatial barrier market.


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3rd, Zero and GameIn the stock market, the rise or the drop of stock market could influence thevalue of the stock whether to rise or drop, for example the Japanese new dateiron stock price falls from 800 Japanese Yen to 400 Japanese Yen, the valueof this stock has been reduced to half. However, in the foreign exchangemarket, the value of a stock and a currency is being calculated differently,this is because the exchange rate is refers to the exchange ratio bothcountries currency, the exchange rate change will influence one kind ofmonetary value to reduce and at the same time another kind of monetaryvalue increase. For instance in 22 years ago, 1 US dollar exchanges 360Japanese Yen, at present, 1 US dollar exchanges 110 Japanese Yen, thisexplains the Japanese Yen currency value rise, but US dollar currency valuedrops, in the end the value will not reduce or increase. Therefore, some

people described the foreign currency trading is "zero and the game",

exactly said is the wealth shift.

In recent years, investment foreign exchange market fund has continuouslyincreased, the exchange rate fluctuation expands day by day, urges thewealth shift to be larger, the daily trading volume of the global foreignexchange involves 150 billion US dollars, the rise or falls 1%, means thatthe 150 billion funds has been shifted. Although the foreign exchange ratechange is very big, but, any kind of currency will not become waste paper,even if some kind of currency unceasingly falls, however, but generally itrepresents certain value, only if such currency has been abolished.

:: Forex Charts

Forex charts assist the investor by providing a visual representation ofexchange rate fluctuations. Many variables affect currency exchange rates,such as interest rates, bank policies, geopolitics, and even the time of daymay affect exchange rates.

In order to help the investor attempt to predict when or in what direction arate may change, advisors provide forex charts. Quality forex websites

provide subscribers with a daily newsletter that includes a forex chart, forexsignals and a forex forecast.

There are a variety of forex charts available for the investor to use and study.Some are very simple using only a couple of forex signals or indicators andare ideal for beginners. Others include 30 or 40 forex signals or indicators


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and live on-line streaming data so that the investor may analyze tradesquickly and accurately.

In order to make an accurate forex forecast, it would seem that the moreindicators, the better, but some analysts prefer a simpler system.

The idea behind studying forex charts is that history repeats itself. Instead oftrying to see the future, a forex forecast evaluates the past. That is to saythat the analyst who is responsible for attempting to predict future currencymoves analyzes what happened to an exchange rate yesterday, last week, lastmonth or last year and uses this knowledge to the best degree he knows how.

Some people trade short term, some intermediate term, and some long term.All three types of traders may benefit from the use of forex charts, just

adapted to their own trading time frame.

Investors also create their own forex charts to evaluate their ownperformance. Creating a forex strategy for oneself is the goal of manyinvestors. Instead of looking to a professional to analyze forex signals, theseinvestors choose to create their own forex forecast.

Others, however, create their own strategy but also follow the opinions ofprofessional currency traders at the same time. It all depends on yourpersonal preferences.

There are other forex charts that deal with known correlations between twocurrency pairs, that is, how they move in relation to each other. Someexchange rates are known to affect other exchange rates, either by moving inthe same or the opposite direction depending on the correlation.

Charts are available that explain these correlations in detail and show whichpairs have strong correlations or strong negative correlations, so that aninvestor can use the movement of the exchange rate of one currency as asignal to trade another currency. These correlations are also the basis for

some forex forecasts.

It can be difficult and overwhelming to enter the world of forex tradingalone. Experts recommend education, practice with a demo account andadvice from a reputable broker who is backed by a quality institution.Learning to read forex charts and evaluate forex signals is a skill that comes


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with time, skills that are essential when an accurate forex forecast is the thegoal.

::What Is The Difference Between Forex and Futures?

1. A Forex trader could trade more transaction compared to the futuresmarket (the trading volume could be a times larger), and the risk will

be strictly under control. The trading volume of the Forex market is46 times larger compared to the futures market, moreover Forextraders could make more profit from the Forex market due to thelarger trading volume (the transaction volume is a few times larger),the REFCO Switzerland rich transaction platform allowed transaction

between 1-100 times to be carry on, moreover a Forex trader coulddecide his or her own transaction amount, for example: Your account

has $30,000, the basic transaction unit is each $1,000 (whichtransaction amount in $1.00, million), namely, so the proportion of themargin of each transaction unit is 100:1.

2. The risk of the Forex trader is under control, such margin call will nothappen compared to futures, through the Forex trading system, yourrisk will receive the strict limit, even if your margin if lower then thedeposit required, the Forex trading system will automatically settleyour position, this means even if a Forex trader suffered losses,moreover if the market is suffering from a disaster fluctuation, your

loss could not surpass your account amount. In order to understand theadvantages, please apply for the demo account to carry on thecomplete zero risk.

3. A Forex trader will receive a large limitation of liquidation and arelatively fair market because the trading volume of the Forex marketis large and it is also the largest liquidation market in the world. At

present the trading volume in the Forex market is 140 billion Dollars,such big market will completely digest your transaction cash.

4. A Forex trader may do 24 hours transactions and other markets aredifferent, the Forex market is a 24 hour linkages market, it starts fromevery Sunday before dawn Australian Sydney market, substandardcollect the transaction center Singapore, Tokyo, London, Frankfurt to

New York continuously to open, such linkage market enable you to do24 hours transactions, also provide flexibility for Forex trader to dotransaction.


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:: Famous Forex Quotes

1. If you get in on Jones tip; get out on Jones tip. If you are ridinganother persons idea, ride it all the way.

2. Run early or not at all. Don't be an eleven o'clock bull or a five o'clockbear.

3. Woodrow Wilson said, "a governments first priority is to organize thecommon interest against special interests". Successful traders seek outmarket opportunities capitalizing on the reality that government's first

priority is rarely achieved.

4. People who buy headlines eventually end up selling newspapers.

5. If you do not know who you are, the market is an expensive place tofind out.

6. Never give advice-the smart don't need it and the stupid don't heed it.

7. Disregard all prognostications. In the world of money, which is aworld shaped by human behavior, nobody has the foggiest notion ofwhat will happen in the future. Mark that word-nobody! Thus thesuccessful trader bases no moves on what supposedly will happen butreacts instead to what does happen.

8. Worry is not a sickness but a sign of health. If you are not worried,you are not risking enough.

9. Except in unusual circumstances, get in the habit of taking your profittoo soon. Don't torment yourself if a trade continues winning withoutyou. Chances are it won't continue long. If it does console yourself bythinking of all the times when liquidating early preserved gains youwould otherwise have lost.

10.When the ship starts to sink, don't pray-jump!11.Life never happens in a straight line. Any adult knows this. But we

can too easily be hypnotized into forgetting it when contemplating achart. Beware of the chartist's illusion.


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12.Optimism means expecting the best, but confidence means knowinghow you will handle the worst. Never make a move if you are merelyoptimistic.

13.Whatever you do, whether you bet with the herd or against, think it

through independently first.

14.Repeatedly reevaluate your open positions. Keep asking yourself:would I put my money into this if it were presented to me for the firsttime today? Is this trade progressing toward the ending position Ienvisioned?

15.It is a safe bet that the money lost by (short term) speculation is smallcompared with the gigantic sums lost by those who let theirinvestments "ride". Long term investors are the biggest gamblers as

after they make a trade they often times stay with it and end up losingit all. The intelligent trader will . By acting promptly-hold losses to aminimum.

16.As a rule of thumb good trend lines should touch at least threeprevious highs or lows. The more points the line catches, the better theline.

17.Volume and open interest are as important to the technician as price.

18.The clearest and easiest way to determine a trend is from previoushighs and lows. Higher highs and higher lows mark an uptrend, lowerhighs and lower lows mark a downtrend.

19.Don't sell a quiet market after a fall because a low volume sell-off isactually a very bullish situation.

20.Prices are made in the minds of men, not in the soybean field: fear andgreed can temporarily drive prices far beyond their so called realvalue.

21.When the market breaks through a weekly or monthly high, it is a buysignal. When it breaks through the previous weekly or monthly low, itis a sell signal.

22.Every sunken ship has a chart.


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23.Take a trading break. A break will give you a detached view of themarket and a fresh look at yourself and the way you want to trade forthe next several weeks.

24.Assimilate into your very bones a set of trading rules that works for

you.

25.The final phase in a bull move is an accelerated runaway near the top.In this phase, the market always makes you believe that you haveunderestimated the potential bull market. The temptation to continue

pyramiding your position is strong as profits have now swelled to thepoint that you believe your account can stand any setback. It isimperative at this juncture to take profits on your pyramids and reducethe position back to base levels. The base position is then liquidatedwhen it becomes apparent that the move has ended.

:: Forex Development History

Foreign exchange development history - exchange market evolution foreignexchange development history - exchange market evolution goldremittance system and Bretton woods agreement

In 1967, a Chicago bank rejected to provide pound loan to a professornamed Milton Friedman, because his purposed was to use this fund to sell

short the British pound. Mr. Friedman realized excessively that the priceratio from the British pound to US dollar at that time was high, he wantedfirst to sell the British pound, after the British pound fell he buys back theBritish pound to repay the bank again. This family bank rejects the loanoffer based on the "Bretton woods Agreement" which was established 20years ago. This agreement has fixed the various countries' currency to USdollar exchange rate, and the price ratio between the U.S dollar and the goldis also fixed to 35 US dollars to each ounce of gold.

The Bretton Woods Agreement was signed in 1944, the purposed was to

prevent the currency to escape between countries, and also to limit theinternational speculation, thus to stabilize the international currency. Beforethis agreement was signed, the gold remittance standard system which waswidely used since 1876 - was leading the international economy system untilthe First World War. In the gold remittance system, the currency was at thestable level under the support of the gold price. The gold remittance system


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has abolished the old time king and the ruler which depreciates the currencyvalue unlawfully, which will lead to inflation.

But, the gold remittance standard system is certainly imperfect. Along with acountry economic potentiality enhancement, it can import massive productsfrom overseas, until it exhausts the gold reserve of certain country. Itresulted the supply of the currency reduces, the interest rate raises, theeconomic activity will start to decline until it reaches the recession limit.Finally, the commodity price falls to the valley, gradually attracts othercountries to stream in, massively rushes to purchase this country commodity.This will pour gold into this country, this will increase this country currencysupplies quantity, and it will reduce the interest rate, and will create thewealth. This is so called the "the prosperity - decline pattern and is thecirculation of the gold remittance standard system, until the trade circulation

and the gold freedom was broken by the First World War.

After several catastrophes wars, the Bretton Woods agreement has appeared.The countries which signed the treaty agreed to maintain the domesticcurrency to US dollar exchange rate, as well as the necessity of thecorresponding ratio of the gold, and only allow a small fluctuation.Countries are prohibited to depreciate the currency value for the gain trade

benefit, only allows the country to depreciate not more then 10%. Enters the50's, the continuous growth of the international trade causes the fund large-scale shift which produces because of the postwar reconstruction, this causes

Bretton Woods system which establishes the foreign exchange rate to losestability.

This agreement was finally abolished in 1971, US dollar no longer couldconvert to gold. Until 1973, each major industrialized nation currencyexchange rate fluctuation has been more freely, mainly regulates by theforeign exchange market through the currency supplies and demandquantity. The business volume, the transaction speed as well as the pricevariability, have achieved a comprehensive growth in the 1970's, come along

with the emerge of price ratio fluctuation, the brand-new financial tool, thenonly the market liberalization and the trade liberalization could be achieved.

In the 1980s, along with the published of the computer and correlationtechnology, the international capital has flow rapidly, and strongly relatedthe Asia, Europe and America market. Foreign exchange business volume


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from 80's rises daily from 70 billion US dollars to 150 billion US dollarsafter 20 years.

European market inflation

One of the reasons why the foreign exchange developed rapidly was therapid development of the Euro dollar market. In a Euro dollar market, USdollar is stored beyond the border of America banks. Similarly, the Europeanmarket is refers to property depositing outside the currency rightful ownercountry market. A Euro dollar market was formed at first in the 50's, at thattime Russia deposited its petroleum income beyond the US border, avoid

being freeze by the US government. This has formed a large offshore USdollar national treasury which is beyond the control of the US government.The American government has formulated a law to prohibited US dollar

from lending money for the foreigner. Because the degree of freedom of theEuro dollar market is bigger and the rate of return is bigger, therefore it haslarge attraction. Starting from the 80's, the American company starts to

borrow loan from the offshore market, they discovered that the Europeanmarket is a wealth center which consists of large amount of floating capitalwhich could provide short-term loan.

London once was (until now still is) one of the main offshore market. In the80's, the Bank of England in order to maintain its global finance industrycenter dominant position, using US dollar as England pound substitution to

make loan, thus to become a Euro dollar market center. London's convenientgeographical position (is situated between Asian and Americas market) alsohelps to maintain the European market as the dominant position

:: Forex Trading

Forex trading isnt strange words for those who looking forward to makequick profit in the financial market. Most investors will have at least hear orread about Forex trading. If Forex is a new term to you, please do read theIntroduction to the Forex market before proceed reading this Forex tradingarticle.

Forex trading is said to be the highest risk with highest return investment (orspeculation game to be more accurate) in the financial market. The amount


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traded in the Forex market is much larger than any stock market or evencombining few stock markets. Forex trading is simply a world wide tradingmarket running 24 hours from Monday to Friday.

Everyday, there are new Forex traders entering into trading Forex. Some ofthem dont even fully understand how Forex is traded but have alreadytrading Forex. They are not idiot who want to burn their hard earned money,its just because Forex market is simply too lucrative market to enter withextreme high return. Any Forex traders can easily make a double return justin few minutes time trading Forex.

Forex trading is the trading of buying or selling certain currency. Forexample, buying US Dollar, then selling it later at a higher price to gain

profit. Forex traders may also first sell US Dollar and later on buy it back at

a lower price with the same gaining profit. Its simple strategy of sellingprice minus buying price to make profit. In Forex trading, we just treatcurrency as a good, buy it and sell it.

You might now think how can Forex trading make huge profit just by sellingand buying currency? Forex is traded using margin, Forex traders dont needto full amount to buy any currency. For example, Forex traders just need1000 Dollar to buy up 100,000 Dollar. This allows any Forex traders tomake huge profit with little money.

Another important factor that any Forex traders can make huge profit is thehigh fluctuation for currency. Every day every seconds, the currencyexchange rate is moving up and down, the Forex exchange rate fluctuatemore heavily whenever there is any important economic data being released.

Forex trading is simply sounds too easy for anyone to make profit in veryshort time. But before you committed into Forex trading, it is stronglyadvised to have full understanding in Forex trading. Do read up other Forextrading articles in this website and share Forex trading knowledge in theForex forums.

Introduction to Foreign Exchange Markets

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