Forex is a word many of us have heard, but few truly understand it’s meaning. Forex, or foreign exchange is used to signify a global currency trading market. It’s the largest financial market in the world, consisting of more than trillion dollars worth of transactions – every day. As investors big and small are becoming interested in playing the Forex market, it continues to grow at a rapid pace. In addition to being the world’s largest financial market, it’s also the most fluid. There’s no central marketplace where the currency is exchanged. Forex is a decentralized financial market, and all trading takes place over the counter. This makes Forex very different from traditional markets (stock market for an example), and provides several unique benefits to the investors and traders – one of the biggest ones being the ability to choose from many different deals at any time.
Generally speaking, bigger Forex dealers will be able to offer better rates and pricing to their clients. Forex is available twenty four hours, every day from Monday to Friday, and trading takes place all around the world – although it’s concentrated around major global financial centers. Every single trade that takes place in the Forex market can be described as both a buy and a sell. In effect, a Forex trader is buying one currency while at the same time selling another. The two currencies involved in the trade are called a “currency pair”. The first currency thus becomes the “base currency”, while the other is known as “counter currency”.
Currency pairs can be seen as unique items that can be sold or bought on the Forex market. When making a Forex buy, the base currency is bought, while the other – counter currency – is in effect, sold. On the other hand, a Forex sale would mean that the counter currency is bought, while the base currency is sold. The Forex market revolves around currency pairs, the four most important and most heavily traded ones being Euro/US dollar, US Dollar/Japanese Jen, British Pound/US Dollar and US Dollar/Swiss Frank. Of course, other combinations of these and other currencies are allowed as well.
Naturally, there’s a lot more required in order to be a successful Forex trader than simply knowing the basics and the most popular currency pairs. The best way to learn is through practice, and in Forex trading, that means using a demo account. Most better online Forex trading platforms offer free demo accounts to new traders. When you register for a free demo account with an online Forex trading platform, you would get access to the same Forex trading software that real clients (including some of the biggest financial institutions, banks and governments in the world ) are using, with one exception – while they are making multi billion dollar deals every day, you will be trading with virtual currency, without any real risk. Still, everybody’s got to start somewhere, and learning about Forex through practice is the best way to become a successful Forex trader in time.