Forex Trading – An Introduction

Forex Trading as commonly called stands for Foreign Exchange Trading. It is biggest financial trading market in the world having a daily turnover in excess of US$1 Trillion. The figure signifies a quantity amounting to about 28 times the combined quantity of all US equity trading markets.

Forex Trading method buying of one foreign money by paying in another. Each transaction involves a buy and a sale of money at the same time, since money trading is always done in pairs for example USD/EUR or USD/GBP etc.

Foreign money trading or Forex Trading is undertaken for two purposes. About 5-7% of the transactions are undertaken by institutions that do business in foreign lands or companies that have to transform their foreign money earnings into domestic money. The rest of the Forex Trading is done purely on speculative basis with profit objectives.

For trading by speculation purposes, the best profit making opportunity lies in most traded currencies (clearly the currencies of most economically progressive countries) also called the “majors” in Forex Trading parlance. They be make up of consistently US Dollar, GB Pounds, Japanese Yen, European Unions EURO, Swiss Franc, Canadian Dollar, Australian Dollar etc.

The Forex Trading market is a 24 hour market, beginning at Sydney sunrise and opening markets westward as the sun rises, Tokyo, London, New York in that order. This facilitates investors around the globe to respond closest to value fluctuations of their holdings caused by political, economic or social events occurring around the world, be it day or night.

The Forex Trading market does not function by any offices or exchanges as in case of other financial markets. It is considered OTC (over the counter) or ‘interbank’ market since the trade is conducted between parties over the telephonic or electronic network only. Forex Trading is the biggest financial quantity business but happens behind the curtains with complete transparency

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