FOREX is the abbreviation for the Foreign Exchange market. FOREX is fundamentally an international exchange market where currencies from all parts of the world are bought and sold for profit. The market today began in the 1970′s. FOREX is a very unique market because it isn’t based in any given place. It also has very few qualifications for investing. FOREX is likewise free of external controls. The investors (participants in the market) largely determine how much a currency is worth based on demand. Almost anyone can invest in FOREX, and there are strategies for investors who wish to have long-term gains, and strategies for investors who desire short-term gains. The huge array of investors makes FOREX quite unique in the financial community.
FOREX isn’t centered at one place like the NYSE. The specific hours for FOREX trade are 24 hours a day from Sunday afternoon to Friday afternoon. FOREX transactions can take place at most any time, anywhere, all over the world. There are FOREX dealers in about all of the time zones. It is easy to find them. Many dealers can be found online. All an investor does is decide what currency he or she wants to purchase, contact the dealer, and then makes the purchase. Many investors purchase using a credit line (money they don’t have). This is called marginal trading.
Marginal trading is a term used for trading with borrowed capital. FOREX investments can be taken without actually having the money. All an investor needs to do is borrow the money for a certain currency. The investor wants to select a currency that will increase in value quite rapidly. Once the currency increases, the investor pays back the money he or she borrowed and makes sheer profit. This is a high-risk investment. However, the rewards are great (as with most high risk investments).
FOREX traders often have to analyse the market. FOREX involves a certain amount of calculated risk, like all investments. Two ways to calculate these risks are though Technical Analysis and Fundamental Analysis.
Technical Analysis is based on the notion that trends through history will continue. A FOREX investor will find that a certain currency is very strong and appears to be rising at a normal rate. The same investor will also assume that the currency won’t decline in value, and will continue to rise, as it did in the past. The investor then purchases a large amount of that currency and expects to make a profit. This investment entails a large assumption but is relatively safe.
Fundamental Analysis is an analysis of an entire countries situation. Investors utilizing this technique look at the situation of the country under which the currency finds its base. Factors such as the countries economic status, political status, and global status are taken into account. A Fundamental Analysis investor wouldn’t invest in currency from a nation that just overthrew its leader and is in political shambles, for example. Although this investment seems logical, it doesn’t take into consideration one of the fundamental elements of FOREX trading. FOREX currency values are largely set by the investors. That being said, Fundamental Analysis assumes that other FOREX traders will view a countries situation in the same manner and respond accordingly.
FOREX can be very beneficial to a wide variety of people. FOREX trading can gain investors a large amount of money either over an extended period of time, or in a very short period of time. Investors who choose to invest in FOREX are generally knowledgeable about the market and understand the current situations in many countries of the world. Investing in FOREX is simple and highly recommended for anyone who wishes to enjoy profits from top-notch investments.