Getting Started with Forex Trading
For those that are just starting out with the stock market, the idea of getting into foreign exchange can be daunting to say the least. You might have heard of foreign exchange referred to as Forex or maybe even FX but they are all basically the same thing – a form of exchange for the global decentralized trading of international currencies. With the daily rise and fall of all the different currencies around the world, you can imagine why getting your foot into the door of Forex could make for a very profitable outing in the long run.
It is the Forex market that allows companies in one country, for example the United States, to import goods from another country like Australia and pay for the product in Australian dollars, despite the first company’s business and revenue being based off of US dollars. If you are just learning about foreign exchange then you might want to have a look at this comprehensive summary of the Forex market as well as a short reference of related FX terms for those that are new to Forex.
It might surprise you to know though that the United States is not the top currency trader in the world or even in the top 3. The top spot would belong to a Deutsche Bank out of Germany with the first US bank, Citi, trailing behind in the number 4 position, immediately followed by JPMorgan at number 5. Despite that fact, the US Dollar is still the most traded currency by value by a margin of more than double any other currency with the Euro being the immediate runner up.
So what does all of this information mean for investors you might ask? Quite a lot actually, although in the simplest terms possible, those that can predict the trends in exchange rates between different forms of currency can leverage the differences in their favor by buying and selling at the right time. Buying and selling can mean either buying currency outright or buying products in a currency that will be worth more in another currency.
The foreign exchange market is one that rarely sleeps although it does enjoy the weekends off interestingly enough. While you are asleep there are thousands of people hard at work tracking changes and predicting trends as to what will go on in our foreign exchange market. It is this market that ties all of the economies of the world together seamlessly.