What Is Forex? A Brief Introduction to Foreign Exchange

The Foreign Exchange (known also as the Foex market) main function is providing currency trade services everywhere around the globe between banks.

It is the biggest financial market in the world, with over 1.4$ trillion approx. worth of trading every day.

The New York Stock Market on the other hand has a volume of 24$ billion approx. a day, it isn't hard to see the difference in numbers.

But why do they differ so much?

The main aim of the foreign exchange is to turn one currency into another, facilitating international trade and investments for businesses. It aids direct speculation of the same currencies and of the change in interest rates in two currencies. And that is where we come in.

Forex is made up of four predominant markets, they are the American, the European, the Asian and the Australian. The tradings are made twenty-four hours a day per five days a week. You can trade from everywhere, but have got to keep an eye for the time in other countries for their respective closing times, before the weekends.

Money is what Foreign exchange is all about. The currency of a nation is traded for another, so in the end we're always going to trade currencies in pairs. The pair of currencies most traded are the Japanese Yen, British Pounds, Euro, Australian Dollar and Swiss Franc usually bought or sold against the US dollar.

In the old times, Forex trading was an exclusive privilege of the few who worked in the business of investment banking or worked directly for large corporations, to minimize the losses - and thus enhance the profits - of currencies swaps, being careful of the market's "mood swings".

The number of individual brokers is growing day by day, you only need a connection to the internet to start trading. A lot of brokers allow to start an account with very little investment on your part.

But, like the good old stock market, the less we invest the more likely we're going to lose because lady fortune won't always be smiling at us. There are losses we must be able to allow for the gains in the long run we have aimed for, when we firstly devised our (hopefully) winning strategy.

This is of course an advice for the traders like me who like to take their time to think ad adjust to the situation as DAYS pass by. There is however a kind of trader that invest lots of money, enters a trade and exits in 15 minutes. Even if it's possible to gain like that, you can't always predict how it will turn out in the future.