Foreign exchange or forex trading is the holding of currency or selling and buying one currency for another. Foreign exchange is the world’s biggest financial market. The average daily forex transaction is more than US$ 3 trillion. It would be about 150 times to what the Wall Street trade in a day. Forex is also the most volatile and liquid financial market place. The currency rate fluctuates every now and then.
Forex does not have a centralized exchange like the New York stock exchange or the commodities markets that has exchanges in New York and Chicago. Forex trading is a world wide network of governments, hundreds of central banks, thousands of commercial organizations and hundreds of thousands of traders connected by computers, faxes, phones and other forms of communication technology. Online forex trading has now become more popular all over the world.
Forex trading happens 24 hours a day, five days a week. At about 5pm EST on Sunday, the Asian session starts which goes on till 2am EST when the European trading session begins and continues up to 8 am EST when the American session opens and makes full circle back to the Asian trading session. If you are involved in online forex trading, you should be aware about the time zone, otherwise you will not be able to know the time of trade for a particular country.
The value of a currency rises and falls in comparison to the currency of other countries. Several factors are responsible for the change in currency rate. A country’s economy and economic influences like interest rates and inflation, government and central bank policies, political situation and other social factors account for some of them. If any country announces economic policies, presents a budget or if there is any change in government, you should be careful while purchasing or holding the currency of that particular country. It is probable that the value of that country’s currency may go up or go down.
Major currencies which are traded more internationally are European Union Euro, US dollar, Great Britain Pound, Swiss Frank and Japanese Yen. Most of the world currencies are traded against the US dollar. Thus economic policies, inflation, political situation and other social factors in the United States have more impact on the foreign exchange market.
Investors find online forex trading currency much more attractive than trading in stocks. When you trade in stocks, there are thousands of companies to choose from when trying to decide which ones to invest in. With the Foreign Exchange the number of choices is limited and you can concentrate on which currency you should invest. Profit potential in forex is also greater than stocks. Log on to www.ac-market.com for more information. |
Added: Wed Apr 02, 2008 4:36 am GMT 