Friday, October 7, 2011

What is Forex?

The word “Forex” comes from shortening the phrase “Foreign exchange” that is used as a name for international interbank currency market. The new Jamaican currency system having replaced Bretton Woods system, rates of many national currencies were no longer dependent on the gold reserves of a particular country. The laws of supply and demand so typical for market economy started to influence the price thus inevitably leading to a new trend called “floating rate policy”.

Forex participants
Forex is a currency exchange market all over the world. It does not have center or branches; it is placed wherever the participants of exchange transactions are. Central state banks, commercial banks, investment foundations, enterprises, private investors, traders and ordinary people are the participants of the Forex market. Exchanging one currency for another, they automatically become direct participants of the Forex currency market.
Forex market volume
The total transactions volume on Forex is huge. A daily summary money turnover in 2010-2011 equals 4 billion dollars. And the number is increasing.

How to make money on Forex?
It is necessary to speculate exchanging currencies: to buy at a less price and sell at a high price so that Foreign Exchange may bring revenues. It does not require going to the banks or exchange offices at all. You can trade currencies through the Internet.
Many people, got used to hear news about the dollar rate every day, believe that the currency price does change every day. But in reality rates change very rapidly, almost every second. Though the size of those changes is usually small. But if a person possesses a fortune even the slightest price change can bring a considerable financial result.

Forex trading capital amount
Today you do not need great assets. There is a so called margin trading. Thanks to it a person receives the same financial result from each trade as if he possessed funds one hundred or two hundred times bigger than his own. This mechanism is called “leverage”.
Let’s say a person has one hundred dollars. With the leverage of 1:100 he is able to manage 100*100=10,000 dollars. That is why even a tiniest currency rate change of one cent will bring him a considerable profit, approximately 100 dollars at a certain volume of a trade.

Currency trading software
To make Foreign Exchange work more comfortable, a special software called trading terminals was elaborated. Thanks to that software it becomes easier to execute trades and watch the currency rates. In addition there is a possibility to receive economic news and carry out technical analysis in the trading terminal.

Training trading
For users’ convenience foreign exchange can be used as a training base and not only for real time trades. It takes only to open a special training account called demo account and in a couple of minutes you will be able to study all the aspects of trading without any real money investing.

Forex market opportunities
Today Forex market opens wide opportunities for all people. For some of them it is a good investing way. Investment in traders is characterized by high level of profitability and is convenient for both investing all of the capital as a whole and diversifying assets by dividing the portfolio between different spheres of investment.
For others Forex currency market is an opportunity to get the main or an additional income source. As opposed to possessing shares, currency trading may bring profit even if the market falls. For example, during the crisis. That is why making money on currency rates difference is more popular during the economy instability. Besides, as a rule, the range of currency fluctuation is increased in such periods which raises the potential possibility of gaining revenues.

Forex broker
A person requires a Forex broker so that all the possibilities of the currency market would become available. A bank or dealing center (providing possibilities of currency dealing) may act as a broker. As a rule, the conditions are more suitable in a dealing center and registration process is easier, that is the reason why most of the newbies choose exactly DC.

What is a broker
Broker is an intermediary between a trader who wants to earn on currency rate difference and other market participants. After signing in on the web site, a person is offered to download a trading terminal for a regular or mobile trading and to start working. If a person is trading for the first time, he has to study Forex articles and, may be, open a demo account where he can easily test his skills and make sure the currency trading may bring a considerable financial outcome.

Choosing a broker
Choosing a broker, many people ask the same question, which one is the best? Hundreds of forum pages are used up, tens of articles are issued, various rating systems are created and a lot more, but there is no certain answer yet found to this question. Each person has his preferences and tastes. So one and the same broker cannot be suitable for everyone and be convenient for all the traders.

Which broker is the best?
Answering the question which Forex broker is the best, we should say: your broker. The one you got used to, the one you have worked with or the one you like. It will be the best for you. And if you are not certain yet, you may choose right now, open a trading account and concentrate on the process of profit making which is much more pleasant than choosing a broker and looking for reviews.

How much can you make on Forex?
Forex market trading is an opportunity of an endless profit. For example, if a manager or employee of the firm is limited by salary or possibilities of the enterprise, the Forex revenue is equal to percentage comparative to your capital and the trade volume. So theoretically you can increase your trading funds and get promoted ad infinum what will never happen to you staying on the usual positions. When trading efficiently and profitably the earnings may be equal to tens and even hundreds of thousands of dollars a month. A quantity of profit received depends directly on your abilities and persistence. So if you believe in your powers and think that you deserve more, then start walking your path into the world of financial freedom and independence right away. While you are reading these lines currency rates may have been changed 3-5 times and lots of successful traders have received hundreds of thousands of dollars, that have found their way to a correspondent trading account. What d’you think, may be it’s the time to join them?

Source: website