There are many reasons to get involved in FOREX trading – high levels of leverage, merchant capital liquidity, truly a 24-hour trading environment, the convenience of online trading, and the list continue to grow.
FOREX trading is one of the latest hypotheses in the world of commerce. With more than trillions of average daily turnover, the foreign currency exchange market stands as the largest trading market. Seven of the world's currencies, the US dollar, the Australian dollar, the Japanese Yen, the British Pound, the Swiss Franc, the Canadian Dollar, and the Euro Dollar, are traded on a large scale every day throughout the world.
This is just a world market because there is no centralized trading location available for FOREX traders. Daily FOREX trading starts in Sydney and moves around the world to Tokyo, London and then New York. Unlike other financial markets, investors can respond to fluctuations in the value of money caused by economic, social and political events when they occur – day or night.
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There are several reasons why you should learn about FOREX trading, this includes the large leverage levels available in the FOREX market, commission free trading, and instant and convenient online trading, and most importantly, you can make money regardless of the bull/bear market.
For newcomers, FOREX means foreign exchange, or more in detail, foreign exchange. This involves buying and selling currencies simultaneously. Every time a FOREX trader makes a transaction, he spends different countries 'currencies to buy other countries' currencies. This trade may look funny to you at first because FOREX traders buy and sell money at the same time.
For beginners, reading FOREX quotes may be confusing. Some general quotes that you might see are: USD / JPY 110.2, EUR / USD 1.2385 / 1.2390, and GBP / USD 1.7360 / 65. Now, these numbers may look complicated but the concept is relatively simple. Currencies quoted in pairs mean relative values compared to others.
FOREX trading involves many risks. Thus, an analytical approach is always needed to manage and minimize these risks. Similar to other investments, FOREX traders apply two types of approaches to managing their risks: fundamentals, and technical analysis.