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.
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