Forex for the Clueless

In our normal, everyday lives, we are aware of how the rise and fall of various currencies can affect prices of products, goods, and services essential to us. Yet one can ask any normal folk on the street exactly what FOREX is and most of the time, they would hardly be able to tell you what it is. So what exactly is Forex and how does it work? It is important for all of us clueless people to have at least a rough idea of what it is.

By definition, FOREX is also known as the Foreign Exchange Market, which began in the 1970s. It is an international exchange market involved in the buying and selling of currencies wherein participants determine the price of one currency against another depending on its supply and demand. It is the largest liquid finance market available in the world.

In a way, the FOREX is unique because the trade involved can range from 1 to a Trillion US dollars per day. A single investor may never be able to affect the price of a major currency, and the combination of small constant fluctuations in currency prices daily can create an environment that attracts investors who desire to broaden their strategies. The market is huge, and there is a vast number of buyers and sellers, therefore, making it free from external control and very difficult for any participant to manipulate.

There are two essential strategies in FOREX trading. The first being the most widely-used by small and medium sized traders is Technical Analysis, which originates from the idea that all information about the market and a currency's future fluctuations is found in the chain of its price. The second strategy, called Fundamental Analysis, varies from the first in that it takes into consideration the economic and political situation of a currency's country of origin.

For those interested in FOREX trading, the trade is open 24 hours a day from Sunday afternoon to Friday afternoon, or 00:00 GMT on a Monday to 10 p.m. GMT on a Friday. The dealers are present to quote all major currencies in any time zone around the world, and the investor must decide what currency he would like to purchase via the dealers. Trading activities can also be facilitated online.

The benefits of FOREX trading are immense, as it is considered to be one of the most rewarding types of investment available! Although the risks are great, the potential profits are high compared to other initial capital investments. Because of the vastness of the market, it is almost certainly impossible for other investors to influence the market for their personal benefit.

It is basically an "equal opportunity" investment in the idea that it matters not what country an investor is from. To excel in this area of investment, one has to be diligent and able to make informed investment decisions by reading and understanding daily fluctuations of the currency market. It would always help the aspiring trader to educate himself on how the market works. A way of doing this is by applying for demo Forex accounts online which can allow the beginner to experience Forex trading in real market conditions.

So for all FOREX freshmen out there, keep an open mind and do not be fazed-out or afraid to try a new experience. Do your research, and learn more about Forex trading at your own pace!

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