The “place” where currencies are exchanged like stocks or futures, by anyone from the stand-alone casual trader to the day-traders to the companies to the national banks? This is the foreign exchange market: where fortunes are made and banks are ruptured, where people earn thousands and lose them the very next day. Do you want to learn more? Read on.
The forex market is the single largest financial market in the world, with an average daily traded value of over two trillion dollars. Most people can’t even comprehend a number that size. The market is made up of large and central banks, governments, multinational corporations, speculators, and other financial markets. The market is tiered, unlike other markets, with price ranges for each tier. The top tier is the inter-bank market, where over 53% of the trades are made. And why not? Banks used to have the only access to the forex market, until the advent of online trading for smaller companies and even individuals. Since the foreign exchange market has no physical location, all of it now takes place on the internet-which means pretty much anyone with the capital can take part.
Just under the banks are the corporations and the companies; they don’t trade nearly as much as their money-dealing counterparts, but they certainly have the capital to make some large investments in good traders. Even so, they don’t have a significant impact in the short-term of the market. They do, however, allow day traders to come into play. Day traders are arguably the most important factor in the forex market, since they buy and sell within the same day; they keep the market liquidated and flowing so that when it comes time to cash in, it’s possible. National banks, of course, also do this, but on a much larger scale.
There’s something else that makes the forex market different from other markets: the margin. Also called the collateral or, in forex markets, the minimum security, this is smaller than in any other market. With the same amount of capital, you can deal in funds five times larger on the forex market than in futures, and as much as fifty times larger than in stocks! Now that’s a pretty big difference!
That, combined with the sheer size of the forex market, makes it the single most drastically different market available-and what’s more, it’s available to everyone! Granted, there are tiers, divided based on the amount of capital the trader has, but that doesn’t mean that any trader is excluded. These factors, of course, lead to the point that the forex market is also more complex and volatile than any other market. That means you need to be completely clear in your understanding the market and its indicators. Without the proper training, a new entry into the market could quickly make some big losses. That’s why education about the market is so important.
So that’s some more about the forex market. Still interested? Look around; there are trading systems, platforms, software, training, seminars, webinars, and brokerages everywhere. Find the right one for you, and you could be on your way to a major profit in the foreign exchange market!