The foreign exchange or forex market is an over-the-Counter market for the trade of global currencies. This marketplace determines international exchange rates for each currency. It includes all facets of trading, buying and selling currencies in determined or current market prices. However, this market does not depend on any one particular market maker. Rather, it acts as a platform for trading across many markets.
Forex is traded over the counter either between buyers and sellers or in floating markets between brokers. Usually, Forex is bought in countries whose currencies are strong in relation to other major currencies. The strength of a country’s currency is usually determined by economic factors like its balance of trade (exchange rate between imported goods and exported goods), interest rates and other economic aspects. Forex can be made more efficient through use of leverage, which means that traders can control the size of their investment using a small amount of capital. Traders may leverage up to 100 times their capital.
Forex is usually accessed via the Internet using banks, brokerages and financial institutions that trade currencies on the market. Forex is a popular way for online investment in a growing number of countries. Online forex trading is the fastest growing e-business. This can be accessed on computers connected to the internet, on mobile phones and on other portable devices. Trading in forex can be done twenty four hours a day, six days a week. It can also be done in the safety of your own home.
To access the forex market and to learn about how it works you need to open a demo account at one of the many online brokerages that provide trading platforms for individual traders. These demo accounts allow you to trade virtual money on a practice account before moving into a real trading environment. When you trade forex with a live account you are subject to the rules of the market and you are protected from sudden large losses.
Forex offers the opportunity for profitable long term investment. Forex is currently traded over three trillion dollars on the over the counter exchange (OTC) foreign exchange. Trading is completed between pairs of foreign currencies, rather than between individual currencies. Most forex traders use the U.S. dollar as the base currency and the currency used to trade is known as the quote currency.
Forex trading is considered by many to be one of the safest investments available. An investor in forex trading is not exposed to the same degree of financial risk as an individual investor in stocks, securities or commodities. However, there is always the possibility of damage to your investment when you purchase foreign currency. For this reason the foreign currency exchange rate is often published by government agencies for information to the investing public. If you are considering forex trading as an investment strategy then it is important that you do your research and understand how foreign currency exchange rate fluctuations affect the markets.