The Foreign Exchange market, also called FOREX or FX, forex 2212 the global currency trading market. 3 trillion, it is the biggest and most exciting financial market in the world.
Whether you sell EUR 100 to buy US dollars at the airport or a bank exchanges 100 million US dollars for Japanese yen with another bank, both of these are FOREX deals. Thanks to the internet you can trade on the FOREX market in the same way as traders from the largest banks and investment funds. All you need to get started is a computer with internet access and a trading account with a FOREX broker. On the FOREX market one currency is exchanged for another. An exchange rate can change very rapidly, sometimes several times a second, so there’s a lot of action going on 24 hours a day, 5 days a week. In general, the currency exchange rates reflect the health of countries’ economies.
Here’s an example of a FOREX trade. You decide to buy 1 000 euros against US dollars. USD exchange rate at which you can BUY at this moment is 1. USD exchange rate at which you can SELL euros for US dollars is 1.
That’s how money is made or lost on the FOREX market. If you look at the FOREX quotes on your trading platform you will see that there are 2 prices for each currency pair. One is the price at which you can buy, referred to as the “ask price”, and the other is the price at which you can sell, referred to as the “bid price”. The difference between those two prices is known as the spread. The ask price is always higher than the bid price. If your FOREX broker offers you leverage of 1:100, you can trade with 100 times more money than your deposit. USD you only need to have EUR 1 000.
With this leverage you can take a position with 100 times larger value, resulting in 100 times bigger profits or losses, therefore great care is required when placing your trade. Equities on the other hand are traded without leverage. To start please get a FREE Practice Account and log in. BUY button if you think the value will rise.