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Currencies are traded in the Forex market relative to other countries currencies. This unique interaction results in currency being exchanged in pairs. For example, the Euro can be traded against the Dollar. Therefore you can buy a currency pair of EUR/USD (more on that later), which represents how many US Dollars one Euro is worth. Forex markets do not have a physical site, meaning there isn’t a big building on Wall Street where a bunch of people yell and waive dollar bills in an attempt to get other people to buy them. Instead, the Forex Market is considered an Over-the-Counter (OTC) market as it is run entirely through a continuous network of banks and brokers. This does not mean you purchase currency at your local drugstore, it just means that there isn’t a centralized location for exchange like many of the famous commodities markets. The basic goal of Forex trading is to swap one currency for another currency then cross your fingers and hope the currency you bought will increase in value relative to the one you sold. Then once it increases in value you sell it back in order to receive more of your original currency in exchange. The Forex markets involve a web of currencies from around the world, and currencies fluctuate in value frequently. A Forex trader will try to make a profit in the foreign exchange market by taking advantage of these market movements. There are hundreds of currencies throughout the world (most of which are tradable) but there are several key currencies which account for the majority of Forex volume. The most popular currencies are referred to as the major currencies.
The majors are as follows: * Dollar (USD) – United States
* Euro (EUR) – European Union Members
* Yen (JPY) – Japan
* Pound (GBP) – Great Britain
* Franc (CHF) – Switzerland
* Dollar (CAD) – Canada
* Dollar (AUD) – Australia
* Dollar (NZD) – New Zealand
Types of Forex Markets There are three potential markets for a Forex investor to Trade Currency. These markets are: the spot market, the forward market, and the futures market. The spot market is currently the largest market for exchange, however in the past the futures market was popular since investors could hold currency for long periods of time. The spot market is where currencies are bought and sold according to their current price. A particular currency is exchanged for another currency based on the currently agreed upon exchange rate. These exchanges are typically facilitated by either a broker or a bank. In the futures market, contracts are bought and sold based upon a standard size and settlement date on public commodities markets. Investors agree to buy or sell a fixed amount of a specific currency at a fixed exchange rate on a fixed date in the future. Forwards markets are similar to futures markets; however the terms of a contract between two parties are determined by solely by the parties involved and don’t have to be based on a public commodities market. Forwards and futures markets are often used to hedge against trades made in the spot market. Some investors will specialize in one type of market while others will try and use all of them to their advantage. Forex Trading is an exciting and fast-growing marketplace. Exciting opportunities exist as Forex trading continues to evolve and grow. Trade like the professionals do! Use 100% Automatic Forex Signals The system that makes THOUSANDS of correct predictions every day! All The Best To You!! Yossi
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