Forex FAQ's (page 1)
What exactly is forex?
Forex is an acronym for FOReign EXchange and is the worldwide currency inter-bank or inter-dealer market that uses a floating exchange rate system. It is the world's largest financial market, with an estimated daily average of more than $1.5 to $2 trillion. Some estimate that it would take the New York Stock Exchange about 2-3 months of trading to equal one day in forex.
Why is forex so popular?
Forex trading is attractive because it offers unparalleled freedoms. A forex trader can live anywhere as long as he/she is within reach of the internet. Work from home or office. Trade while traveling! A forex trader can usually choose his/her own hours to work since the global foreign exchange market is open 24-hours a day. There is NO inventory, NO shipping, NO billing, NO collections, NO employees, NO commuting and NO dress code. And finally, since forex traders can potentially earn a very high income, they enjoy the possibility of never, ever working for someone else again.
How fair is the forex market?
The forex market is so large and has so many participants that no one player, not even a large government, can completely control the long-term direction of the market. That's why so many experts have called forex the "most level playing field" on earth.
Where is the central location of the forex market?
For most currency instruments, there is NO central location where trading takes place. This is called the forex "spot market," not to be confused with currency futures or options. The bulk of forex trading takes place between a few hundred large banks that process transactions for large companies and governments. These institutions continually provide exchange rates for each other and for the broader market. The most recent quotation from one of these banks is considered the market's current pricing for that currency. Trading occurs over the internet, by telephone and through computer terminals at hundreds of locations around the globe.
Can I really trade at any time?
Of course! This system is perfect for people who have jobs or "have a life" and don't want to, or can't, sit in front of their computer all day trading. You can successfully trade around your work hours. Since the FOREX market is open 24 hours a day (Monday through Friday) there are good chances that you'll be able to find trading opportunities that won't conflict with your job.
Can I trade from home?
Trade from anywhere. If you like to travel, this is a dream business. Take your laptop with you and you can trade the FOREX and make money anywhere in the world where you have an internet connection. You can be on the white-sand beaches of Guadeloupe(My country).
You have total freedom of location. FX Trading is not bound to any one trading floor and is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.
How much can I win?
The FOREX has a DAILY trading volume of around $1.5 trillion dollars - 30 times larger than the combined volume of all U.S. equity markets. This means that 1,498,574 skilled traders could each take 1 milllion doll_ars out of the FOREX market every day and the FOREX would still have more money left than the New York Stock would have daily!
Is there any risk?
If you'd like to make $200 to $3,000 for as little as ten minutes of work -- work that involves minimal risk, but plenty of upside potential -- then this ongoing email mini- course if for you.
Yes there is a risk, like in every investment, if you follow our training system and some fundamentals rules, it is much less risky than trading in the other markets. In fact, You can only loose what you decide to; the system of stop loss let you choose before the trade, how much you want to risk! You have a minimal risk for a unlimited potential!
I trade stocks, what is the difference?
I also trade the stock market before, and I can tell you that trading Forex is much easier and less risky than trading shares, and last but not least, you need only $300 to start.
Can I try first for FREE?
This is one of the numerous particularity of the forex, you can try one month for free whith the majority of the brokers, without any obligation. You will have access to the demo trading platform and you will trade in direct, with a simulation account.
In most of the case, you will have $50,000 to start! (not real money). You will place your trades in directs, everything like the pros. Once you are profitable move into a real account with a small investment.
Is it too difficult?
Trading Forex is so easy, anyone can do it. You don't need to watch bloomberg TV every morning or to buy every financial newspaper to determinate the trend. The Forex Market is highly predictable.
When does forex trading occur?
The first session, the Tokyo Session, begins each week on Monday morning in the Asia-Pacific region (Sunday evening in the Americas). Trading continues non-stop, moving into the London Session and on to the New York Session until all markets close on Friday afternoon.
What are the primary currencies traded in forex?
For most online brokers, there are four main currency pairs that are heavily traded and that offer immediate liquidity most of the time:
- Euro / US Dollar
- US Dollar / Japanese Yen
- British Pound / US Dollar
- US Dollar / Swiss Franc
How often does a person have to trade?
The beauty of self-trading forex is that you can trade as occasionally or as often as you wish. You might rely on longer-term strategies that may require checking the market as little as once or twice a week. Or, you might trade shorter-term methods that may require that you watch the market for a few hours a day.
How much money does it take to open a real money trading account?
If you're a new student of forex, you should first practice with a free practice account, often called "demo trading," using "pretend" money. When you feel ready to trade with real money, you can open a "mini" account with as little $300 USD, although we recommend starting with no less than $1000-$2000.
Who participates in the FX market?
Central, commercial and investment banks have traditionally dominated the Forex market. Other market participation is rapidly increasing, and now includes international money managers and brokers, multinational corporations, registered dealers, options and futures traders, and private investors.
When is the FX market open for trading?
Forex is a true global 24-hour marketplace. The trading day begins in Sydney, and moves around the globe as each financial center comes to life. Tokyo follows, then London, and finally New York. Investors can respond in real time to any fluctuations caused by current economic, social and political events.
What are foreign currency exchange rates?
Foreign currency exchange rates are what it costs to exchange one country's currency for another country's currency. For example, if you go to England on vacation, you will have to pay for your hotel, meals, admissions fees, souvenirs and other expenses in British pounds. Since your money is all in US dollars, you will have to use (sell) some of your dollars to buy British pounds.
Assume you go to your bank before you leave and buy $1,000 worth of British pounds. If you get 565.83 British pounds (GBP 565.83) for your $1,000, each dollar is worth .56583 British pounds. This is the exchange rate for converting dollars to pounds.
If GBP 565.83 isn't enough cash for your trip, you will have to exchange more US dollars for pounds while in England. Assume you buy another $1,000 worth of British pounds from a bank in England and get only GBP557.02 for your $1,000. The exchange rate for converting dollars to pounds has dropped from .56583 to .55702. This means that US dollars are worth less compared to the British pound than they were before you left on vacation.
Assume that you have GBP100 left when you return home. You go to your bank and use the pounds to buy US dollars. If the bank gives you $179.31, each British pound is worth 1.7931 dollars. This is the exchange rate for converting pounds to dollars.
Theoretically, you can convert the exchange rate for buying a currency to the exchange rate for selling a currency, and vice versa, by dividing 1 by the known rate. For example, if the exchange rate for buying British pounds with US dollars is .56011, the exchange rate for buying US dollars with British pounds is 1.78536 (1 /.56011 = 1.78536). Similarly, if the exchange rate for buying US dollars with British pounds is 1.78536, the exchange rate for buying British pounds with US dollars is .56011 (1/1.78536 = .56011). This is how newspapers often report currency exchange rates.
As a practical matter, however, you will not be able to buy and sell the currency at the same price, and you will not receive the price quoted in the newspaper. This is because banks and other market participants make money by selling the currency to customers for more than they paid to buy it and by buying the currency from customers for less than they will receive when they sell it. The difference is called a spread.