Lesson 2: FOREX - Getting Started Part 2

Who participates in the Forex market?

The people who take part in the Forex market are split up into 4 groups:

• Governments and Central Banks – these include the Federal Reserve, the Bank of England and the European Central Bank.
• Commercial Banks- such as Citigroup, Barclays Capital and UBS.
• Large international companies – you've probably heard of some of them.
• Individuals – like you and me. This group is very important and we'll get back to them at a later stage.

Now that we've covered the What, the Why and the Who, let’s take a look at the When.

When can we trade in Forex Market?

The Forex market is open 24 hours a day, 5 days a week.

It can be broken up into 3 different trading sessions: The Asian, the European and the U.S Trading session.

Each trading session has a start and finish time and as you can see there is usually a period of time where 2 of them overlap one another.

• The Asian session is also referred to as the Tokyo session and is considered the center for news coming from Australia, New Zealand, Japan and China.
• Japan also happens to be the 3rd largest trading center in the world and the pairs that usually to move during this session include currencies such as the Japanese yen, the Australian Dollar and the New Zealand Dollar.
• The next one, the European, is the most popular. News from all over Europe comes out during this session and on average around 30% of all Forex transactions happen during this time.

Since the European session lies between the Asian and the U.S session, it is where the majority of traders come alive and trading volatility starts to increase.

Pairs that move during this time normally include currencies such as the Euro, the Pound, the Yen and the Swiss Franc.

As the U.S and European sessions overlap one another, it’s considered to be the most volatile time to trade as traders from Europe and the United States are both trading simultaneously.

Pairs that tend to be extra volatile during this time include currencies such as the Pound, the Euro, the Dollar and the Yen.

Lesson 1: FOREX - Getting Started Part 1

Welcome to our first lesson of Foreign Exchange Trading.

Let’s try to understand about the foreign exchange market and why so many people are trading in it.

What is Forex?

The official definition of the foreign exchange market is "A form of exchange for the global decentralized trading of international currencies."

Let’s break that definition down and understand what it actually means.

The Forex market, short for the Foreign exchange market, is also known as the Currency market or Forex, or simply as FX – and it’s the largest financial market in the world.

In the Forex market, currencies from all over the world are bought and sold on a daily basis.

Every day, the Forex market has a turnover of more than 4 trillion Dollars. That means that at any given second during the day, a lot of people are buying and selling currencies from all over the world.

Now that we've covered the What, let's start to focus on the Why.

Why do so many people trade Forex every single day?

• As so many people are buying and selling currencies every day, the Forex market is a very liquid market. This means that in order to trade, you don’t need to wait in line or wait for a specific time.
• The second reason the Forex market is so popular is because it’s open 24 hours a day, 5 days a week. Any person, irrespective of his location, can simply connect and start trading.
• Another reason the Forex market is a booming market is that anyone can start to trade. When someone chooses to start trading, he doesn’t need to have a degree or any specific tools. All he needs is the minimum, which is 100 Dollars (Varies from one broker to another) and a connection to the internet.

You can start to trade with only 100 Dollars since the Forex brokers allow you to trade with leverage.

We'll get back to leverage a little bit later, but what it means is that you can invest small amounts such as 100 Dollars and trade with larger amounts such as $30,000 and $40,000, while only risking your original investment.

Depending on your trading personality and style, the Forex market accommodates to each and every one.

While one person may choose to open trades for a short period of time, there are others that choose to open for longer periods.

Now that we've gone over the What and the Why, let’s take a look at the Who.