The foreign exchange currency market is the largest financial market in the world. It has an average volume of about $2 trillion a day, dwarfing the $25 billion a day in volume traded on the New York Stock Exchange.
Often referred to as “Forex” or “FX” trading, foreign exchange currency trades involve the simultaneous purchase of one currency and sale of another. Currencies are traded in pairs. For example, you may trade the Euro against the US dollar.
In effect, you are buying the currency of a particular country. The purchase of a nation’s currency is equivalent to taking a position consistent with their economic growth. The price of a nation’s currency versus that of another is a direct reflection of what the market perceives of the current and future health that nation’s economy. If you buy the Canadian dollar, you are in effect buying a share in the Canadian economy with the belief that their economy will expand in comparison to the economy of other counties.
The Forex has no physical exchange or central market. Instead, it is an Over-the-Counter (OTC) or ‘Interbank’ market. The entire market is run electronically, within a network of banks. The market is available continuously open. This 24-hour market is achieved by a transitioning of trading activity around the globe. Trading begins in Sydney, Australia, then shifts to Tokyo, Japan. Next, London, England takes over and then “passes the baton” to New York. As New York shuts down, Sydney is opening for business.
The Forex market was not intended for retail traders. The original intent was to provide a currency exchange between banks and large institutions. In fact, prior to the late 1990’s, only these “big boys” could participate in the foreign exchange currency market. An initial capital requirement of $10 to $50 million was required, and there were other obstacles preventing the average person from trading currencies.
The “average Joe” began trading along side the financial behemoths as the expansion of the Internet made it feasible for Forex trading firms to offer retail trading accounts. With trading firms offering significantly reduced capital requirements and online access, all a retail trader needs to begin trading foreign currencies is a broadband Internet connection and the knowledge of how to trade the Forex market profitably.
The Forex market comes with a series of additional benefit, which make it irresistible to traders. There are only seven major currency pairs. Compare that to tracking thousands of stocks. There are no commissions or exchange fees. Your broker simply makes their money from the difference on the bid / ask spread. This is also the most liquid market anywhere. There are other benefits, but you probably have an idea as to why currency trading is quickly growing in popularity with retail traders.
The traditional obstacles have been eliminated. With broadband Internet connections available to most every household, a quality Forex trading course is the only remaining hurdle faced by the retail trader.
Fortunately, the need for education is being addressed. The Forex Income Engine is one of the higher quality courses that not only reviews the basics of the Forex markets but provides a rigorously back-tested, yet simple system you can use to trade the currency markets on an intra-day basis with a minimum of capital. With good instruction, there is very little that stands between you and the ability to benefit from trading the foreign exchange currency market.
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