What Is Forex, Anyway?

1. The FOREIGN CHANGE (FOREX or FX) Market is not a market in the traditional sense. It is, in fact, the closest thing we have to list of forex broker in malaysia a "perfect market" when viewed from an economics perspective. Because all transactions are conducted online, there is no central location where trading takes place as in other forms of stock trading. Copyright (c) 2008 Orlando Thompson The FOREIGN EXCHANGE (FOREX,Guest Posting FX) market is not a "market" in the traditional sense. It is, in fact, the closest thing we have to a "perfect market" when viewed from an economics perspective. Trading is not centralized as it is with other types of stock trading. Trading takes place around the clock on computers and telephones in thousands of locations. Foreign Exchange or (FOREX) is also the world's largest trade market. Daily market turnover has skyrocketed from approximately 5 billion USD in 1977, to a staggering 2.5 trillion (and more) US dollars today. This is 100 times more than the daily turnover on the NASDAQ. Most foreign exchange activity consists of the spot business between the US dollar and the six major currencies (Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar), but the FOREX market is so large, and is hosting so many participants, that no single player, governments included, can directly control or make any significant influence over the direction of the market. The FOREX market is the most dynamic market in the entire world. FOREX trading is done by central banks, commercial banks and international corporations as well as money managers, speculators and private individuals. Trading contracts for currency pair exchange rates is Foreign Exchange (FOREX). It is a NON-DELIVERY trade, which means that there is no physical transaction of currencies, but it is rather an agreement, or "contract" (FOREX DEALS), to trade specific volumes of a pair of currencies at an agreed upon rate. The magnitude of such FOREX trades is that, in order to make the deal, only a proportional amount is needed (the COLLATERAL, or the MARGIN). Thus, if the currency pair exchange rate has changed by some percentage, the value of the MARGIN invested would accordingly change, however - in a much higher proportion. The actual change to the Forex trader’s investment (the MARGIN deposited) will be the nominal exchange rate change multiplied by MARGIN ratio. This is an example of a FOREX Day-Trading deal made to buy EUR 100,000 against USD at 1.3500. This deal is MARGIN-required by the FOREX Trading Platform. The ratio required for this transaction is around 1:100. Accordingly, the trader invests only USD $100. The exchange rate rose to 1.3620 after a few short hours. This is an increase of 0.89%, which is quite normal for the global Forex market. However, thanks to the MARGIN ratio (= the LEVERAGE), the trader's investment went up by 89% (since a leverage

2. of 1:100 has been used)!! Remember: that can happen in less than a day, sometimes in hours or even minutes! But the same thing could also happen in the other direction - traders can't lose more than the original MARGIN deposited. Forex traders can choose to buy or sell EUR in the deal. They may make money (if they were right ...)) when EUR falls. The Forex market offers today FOREX trading not only in MAJORS (the leading world curencies) but also in many other currency pairs (including exotic, gold and silver, etc...). Don't wait to see if you can make money, but invest today and start making it happen.