Forex or the foreign exchange market is the biggest in the world. But what does that mean, and should you get involved? Find out what these huge numbers mean and whether or not you should trade on the Forex market.
Let me take you back in time and tell you how Forex became the phenomenal market it is today.
The Forex phenomenon
In 1970 the major world currencies changed to the floating currency. That means you only have to manage those currencies once and not twice. Previously a trader had to manage all of the currencies of the world.
The market was dominated by only a few players, who controlled the equivalent value of more than US$3 trillion! They had to deal with national currencies and were subject to local conditions.
Because the currency was controlled by a few big players, and the market was well controlled even somewhat competitive pressure created and taken advantage of variables that weren’t in place when the market began.
Now that the market has become electronic you can trade the market on your home computer. The market is open from Sunday 7:00 pm ET to Friday at 2:00 AM ET.
One word of warning and advice
Don’t trade money that you can’t afford to lose. You have access to the market as the globe turns, and when it changes you could have some changes to your trades ability.
When one country devalues its currency there is going to be more value in other currencies, and this will give you some profit. Just do not exceed what you can financially handle and only trade what you can afford to lose.
You can only bet on the market behavior over time but this is one of the more volatile markets in the world. Are there any long term benefits to trading the Forex market? The answer is yes.
The main benefits
The benefits are the potential of millions or even billions of dollars being moved in and out of investments and accounts all over the world in events that genuinely affect the market. These events normally the countries largest export or import products to and the markets where they export or import products.
One of the biggest moves in stocks and bonds happens about every six to nine months along with many other factors.
If you are moving money into an index or another investment and withdrawing cash all that happens is that the money increases or decreases, and then it stops.
What happens is you either gain or lose money, and this creates a wide range of changes in the numbers of shares.
Finally, the most confusing thing on the market is price action. Price action refers to the price patterns, trends, and chart formations that take place every day.
If you want to learn to trade the foreign exchange market it might be a very good idea to read up on the history of the market and how it works and the reasons that cause the market to move.
With this knowledge, you can learn how to make successful trades and maybe make some money.
I wrote a bunch of posts related to the Forex theme, check them out: