Forex Market is a huge virtual international currency exchange point where the world’s most popular currencies are traded against each other by pairs: EURUSD (euro-dollar), USDJPY (dollar-yen), GBPUSD (pound-dollar), and others. It is the largest financial market though it is not centralized like stock or futures exchanges. Forex market was born more than 40 years ago and considered as exclusively interbank place for currency exchange. Currently banks are trading with each other through more than 200 ECN (electronic communication network). F.e. EBS, Thompson Reuters, Currenex, FXCM, Hotspot, SWFX Marketplace and other. Those ECN are connected between each other because same banks could be liquidity providers for different ECNs.
On the Forex market the big players (central and commercial banks, investment and insurance companies, corporations etc.) make the exchange of one currency for another. Demand for different currencies creates significant price fluctuations on the market: the price of one currency starts to increase relative to the other. This leads to the fact that a quotation of the currency pair changes throughout the world.
Those price fluctuations are reflected in trading terminals of all traders around the globe, retail and professional. All those who want to capitalize on increasing or decreasing prices. They look at the chart of the currency pair, analyze and, as a result, make a deal to buy or sell (buy or sell). At this point they become speculators on Forex market. If their prediction was correct and the quote went where they thought through some time traders can close the deal with profits. They can withdraw the profit form the account immediately or can continue to trade and make money.
Of course, trading is a very risky business. Each broker warned its clients that during the trading the client can lose the invested funds and even more. After all, not everything can be calculated and analyzed. For example, such events like unexpected interventions of Central Banks, sudden news could adversely affect the already opened position.
But that never stopped traders. Anyway, risk is virtually linked to all events of our lives and Forex market gives us a great opportunity to earn a decent amount of money wherever there is an access to the Internet. At the home, at the office, in the village or even resting on the beach. Trading of Forex market is available around the clock from Monday to Friday.
Another indisputable advantage of this type of business is that you will always be aware of economic and political news. This will help you to learn to understand how the market might react to an event and benefit from the price fluctuations.
During trading on the Forex market it is important to understand that the loss of certain amount of mopney as a result of an incorrect forecast is the reality which is essential for the normal operation of any financial market, whether it is a commodity market, stock market or currency market. At the same time it increases the joy of successful transactions, teaches discipline and gives invaluable experience and increases the effectiveness of your trading strategies.