What is Forex or Currency Trading?

Forex Trading is simply the exchange of one currency for another. 

The Inter Bank Foreign Exchange Market (IBFXM or FOREX market) is an international market place where trading takes place on the world’s major currencies such as the United States Dollar, the Swiss Franc, the Euro, the Japanese Yen, and British Pound. The Currency Market is made up of approximately 5000 Trading Institutions. International Banks, Government Central Banks, Commercial Companies, Brokerage firms and Individual Speculators.

The foreign exchange market allows companies, banks and individuals to buy and sell foreign currencies. Unlike other financial markets, the foreign exchange market has no single location – trading is done globally via telephone and computer links.
Because the forex market does not operate from a regulated exchange one must take note that there are additional risks associated with this type of trading which must be considered before entering this market.
The Forex market is huge: the trading volume is in excess of 3 trillion USD per day, providing the greatest liquidity to investors. 

In the past small investors have had limited access to the lucrative forex market. The Interbank market is no longer the exclusive domain of large players. Technological leaps have opened up this exciting market to small speculators. Real-time Interbank dealing rates allow the trader to place a buy or sell order and see it executed within a fraction of a second. 

There are always buyers and sellers in the forex market. The market absorbs trading volumes. A trader is never stuck in a position due to lack of market interest, volume and/or liquidity.

How does Forex compare with other financial markets?

The Forex market is open 24 hours a day, 5.5 days a week. Because of the decentralized clearing of trades and overlap of major markets in Asia, London and the United States, the market remains open, liquid throughout the day, and overnight. Most other markets are dictated by the time zones of their trading locations.

There are no restrictions on short selling and stop orders in Forex as there are in the other financial markets.

One 24-hour a day consistent margin rate allows Forex traders to leverage their capital more efficiently with as high as 100-to-one leverage. 

With a start up requirement of $2500 for a standard account and $250 for a mini account, Forex trading is much more accessible than other markets with high margin rates and huge capital requirements.

NOTE: Forex trading is not conducted on a regulated exchange and as a result, there are additional risks associated with trading currencies  

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