Wednesday, September 30, 2009
International Trading: The Forex Market Style
1. Extremely Liquid Market
2. 24 Hour Market
3. Forex market is simply the trading of one currency for another base on the value of the two currencies involved. Almost all countries in the world trade currencies; it’s about buying or selling their currency for another country’s currency that involves determining how much their currency is worth in terms of the other. Therefore, currencies whose value is comparatively less than other currencies don’t get to be traded often, unlike those currencies that have high value.
The exchange of currencies happen 24/7 around the world, in fact, an estimated two-trillion dollars worth of money are exchange in a single day – a pretty gargantuan sum. Just imagine how many millions it needs to accumulate a trillion – let alone two-trillion – and this exchange happened everyday! This is one industry well loved by people who like to be involved in something where huge sum of money is handled everyday.
You can find in the Forex market just about every currency in the world that you need. For every currency in the world, there’s a corresponding three-letters symbol assigned to it for easy recognition during trading. For instance, the United States dollar is recognized as USD, Japanese Yen as JPY, British Pound as GBP, and the Euro as EUR. It’s not a crime to buy and sell different currencies in a day or trade one currency one day at a time. Forex trading is only facilitated by a broker or companies; they are going to charge for the transaction which is only normal. Therefore, consider you number of trades and the fee your broker requires before ending with a high transaction fee.
Trades happened everyday but the most actively traded currencies today are between the USD and the EUR. Next to this is the trade between JPY and the USD and between GBP and the USD. These currencies are among the top of the food chain when it comes to currency trading because of their robustness in the market. Currency trading is possible 24/7 because markets open and close 24/7 around the world. The different time zones around the world, in fact, are one of the major considerations when a trader engages in the Forex market.
Know that in Forex trading, you’ll only be presented with symbols and signs that could mean either a loss or a gain for your traded currency – this is true across all countries and currencies. For example, you’ll see symbols like EURzzz/USDzzz (where ‘zzz’ represents the percentage of trading and your margin for profit). Another example is AUSzzz/USDzzz if you’re trading between Australian dollar and US dollar. It pays to learn and study these symbols so that you would not be confused during trading; however, it’s easy to understand these signs once you’ve seen your Forex statements or your online receipts.