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What is Forex trading?
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Forex (Foreign Exchange) is the name given to the "direct access" trading of foreign currencies. With an average daily volume of $1.4 trillion, forex is 46 times larger than all the futures markets combined and, for that reason, is the world's most liquid market. In the past, forex trading was limited largely to enormous money center banks and other institutional traders. But in just the past few years, technological innovations and the development of online trading platforms, allow small traders to take advantage of the significant benefits of trading foreign currencies with forex.
To exchange two currencies one should sell one currency and buy the corresponding amount of another. If you think one currency will appreciate against another, you may exchange that second currency for the first one and stay in it. In case everything goes as planned, some time later you may make the opposite deal - exchange this first currency back for that other - and collect profits.
Four major currency pairs are usually used for investment purposes. They are Euro against US dollar, US dollar against Japanese yen, British pound against US dollar, and US dollar against Swiss franc. The following notation is used for these currency pairs: EUR/USD, USD/JPY, GBP/USD, and USD/CHF. You may consider them as "blue chips" of the forex market. No dividends are paid on currencies. The investment profits come from well known "buy low - sell high".
Transactions on the forex market are fulfilled by dealers at major banks or forex brokerage companies.
FOREX is the world wide market, so when you are sleeping in the North America some dealers in Europe are trading currencies with their Japanese counterparties. Therefore the forex market is active 24 hours a day and dealers at major institutions are working in three shifts. Clients may place take-profit and stop-loss orders with brokers for overnight execution.
Price movements on the forex market are very smooth and without gaps that you face almost every morning on the stock market. The daily turnover on the forex market is about $1.4 trillion, so investor can enter and exit position without problems.
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Brokers
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GCI Financial Ltd
Online Trading in Forex and Share CFDs. 200:1 leverage, Free demo account. Trade a Standard or Mini account.
Charter FX
Margined trading in Forex and CFDs. Free charts, quotes, and demo account.
Swiss Finance Corp
Trading in Foreign Exchange. FSA regulated broker, offering 2% margin, 2 - 3 pip spreads.
Man Financial
Trade Forex and CFDs on the GNI touch platform. Live prices, fast execution, news and charting
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