If you have ever traveled internationally, you have touched on the world of Forex trading, though you may not know it: When you stepped off the airplane, one of your first stops probably was to exchange your money for the local currency.
What is Forex Trading?
Forex trading turns that little airport or ATM currency exchange into a sport. When investors trade Forex — commonly called FX — they are buying and selling currencies over the foreign exchange market. It is the largest financial market in the world but one in which many individual investors have never dabbled, in part because it is highly speculative and complex. Forex trading is arguably among the most rewarding asset or investment classes for traders and investors.
If you are looking for some better risk/adjusted potential, Forex trading is the smart choice. Provided you know what you are doing — please take those words to heart — Forex trading can be lucrative, and it requires a limited initial investment.
Benefits of Forex over Stock Trading
Forex trades are made over the counter — through Forex brokers or dealers — rather than through a central exchange holding monopoly power to regulate prices.
· The most flexible hours - because traders work across time zones, the Forex program is 24 hours a day, five days a week.
· Currencies are always traded in pairs, so it is just as easy to profit in falling markets as in rising markets.
· The availability of leverage in Forex allows substantial profits on small price movements.
Because Forex is traded in pairs, you are always exchanging one currency for another — buying one, selling the other — just like you would at a currency exchange shop. There are eight currencies known as the “Majors,” or the most often traded: the euro (EUR), U.S. dollar (USD), Canadian dollar (CAD), British Pound (GBP), Australian dollar (AUD), Japanese yen (JPY), Swiss franc (CHF) and New-Zealand dollar (NZD). The major Forex pairs are these currencies paired with the U.S. dollar.
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