What is Forex?

What is Forex?

The forex market is the international foreign exchange market. Forex is an acronym for Foreign Exchange market. It is the largest financial market in the world, with a turnover exceeding the 4 trillion dollars a day. To understand what is this volume of business, it is that can move the stock exchange of New York (the largest in the world) in a whole month of the stock market.

What is it traded in Forex?

With money. How? Yes, Forex trading is the buying and selling of currency, coins, that is, money. Currencies are traded through a broker or dealer and are traded in pairs, for example euro and US dollar: (pair EUR/USD).

It is not actually purchased or sells nothing physically for what may be a little confused. Think of the purchase of foreign currency as the purchase of a participation in a country's economy, since the price of its currency is a direct reflection of what the market thinks about the present and future state of the economy of the country. In Forex, as mentioned above, reflects a certain currency pair quote price traded on currency pairs, according to what is said in this paragraph the economic conditions of a country against the country of another currency that makes up the pair.

Unlike other financial markets, the Forex market is decentralized and does not have a physical location. The Forex market is considered an interbank market or OTC (over-the-counter, counter), due to the fact that this market operates electronically, in a network of banks 24 hours a day.

At the end of the Decade of the 90s of the 20th century, only investors with a high financial power could access to Trade Forex with an initial on the $ 10 million capital. Forex was originally designed to be used by banks and large institutions. However, due to the expansion of the internet, today there are companies of Forex online Forex trade offered "to the retail" for retail investors.

Currencies are traded in Forex?

There are almost as many as countries or economic communities (such as Europe). These are the most traded currencies:

(Forex symbols are always three letters, the first identified to the country and the third to the currency)

Symbol       Currency                  Country            Nickname
USD             US dollar                    United States    Buck
EUR             Euro                            Europe               Fiber
JPY              Japan Yen                   Japanese          Yen
GBP             Pound Sterling           Great Britain     Cable
CHF             Swiss Franco             Switzerland       Swissy
CAD            Canadian dollar          Canada             LoonieAUD             Australian dollar         Australia            AussieNZD             Dollar New Zealand   New Zealand     Kiwi

The most operated all currency is US dollar, followed by the euro, the Japanese yen and pound of Great Britain.

When is it traded in Forex?

The Forex market is unique, is open 24 hours a day. From Tokyo to New York, passing through London, the market moves and can operate at any time, day and night.

Opening and closing of the three most important centers (expressed in hours GMT time):

• Tokyo: Opens at midnight and closed 9.
• London: Opens at 8 am and closes the 17.
• New York: Open at 13 and closed at 22.

Main attractions of Forex trading

• No fees. Usually the trader is not loaded with virtually any commissions. Brokers through which operating charge spread, typically accounts for less than 0.1 per cent of cost per operation, in larger brokers may be even less than 0.07 per cent, of course depends on the leverage, this we will see in more detail later

• Without intermediaries. The Forex market as we are talking about in eFXto is the "spot market" Forex, which means to trade directly with the market.

• Flexible batch. The minimum contract for operation is very flexible in Forex to other markets. And you also choose the size of your operation. This allows you to participate with as small as $50 bills, even you can operate with cents! (although it is not good to operate with tiny beads, you will discover it along the course).

• 24-hour timetable. From Sunday night until Friday afternoon you can operate at any time of the day, even in principle, there is no deadline for the closing of your transaction.

• Leverage. A small sum of capital can be controlled much more trading in Forex, this is due to the high leverage available in this market. For example with leverage 100:1, can make an operation of 100 thousand coins with a deposit of just one thousand. But this is a double-edged weapon, use a high leverage can lead to large profits or high losses.

• High liquidity. Being a such a huge market, liquidity offering is equally enormous. This means that under normal conditions of the market, you can buy or sell instantly.

• Mini and micro trading. You can start trading Forex with mini or micro accounts that they require small minimum deposits, $500 or less. This makes it accessible to virtually everyone, however, to operate with appropriate risk control may be recommended one higher initial deposit, you will already understand it.