An
Introduction To Forex Trading
by Gabriel J. Adams
FOREX
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Forex Trading, also known as FX Trading or Foreign
Exchange Trading, is what happens when you trade one nation's currency
for another. For example, if I go to the bank and exchange ten United
States dollars for 15 Australian dollars, I have completed a simple
Forex trade.
The forex trading market is the largest trading
market in the world. According to a study done in 2004, approximately
two trillion dollars are traded each day in markets across the globe.
The forex trading market is very unique in several
aspects, one of which is its international presence. Unlike the
stock exchange, which is largely located in New York and has set
hours, the foreign exchange market is open twenty four hours a day.
In between the united states, European, Asian, and other markets,
there is always at least one market open.
Other factors that make the forex market unique
are the high liquidity of the market, the wide variety of traders
and institutions involved, and the wide variety of factors which
affect prices.
In the forex market, there is the ask price (the
price at which currency is sold) and the bid price (the price at
which the currency is bought. Usually, these prices are very close
together, often about one-hundredth of a cent apart.
The United States dollar is by far the most traded
currency. Approximately eighty nine percent of transactions involve
the United States Dollar. Other highly traded currencies include
the Euro, Yen (Japanese), Sterling (British), Franc (Swiss), and
the Australian Dollar.
The forex market includes many types of traders.
The largest traders are banks. Actually, about fifty-three percent
of forex transactions are in between two banks. Other traders include
non-bank financial institutions, other corporations, retail exchange
brokers, investment firms, hedge funds, and speculators.
The forex marketing is the largest, and arguably
most complex market in the world.
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