What is the Forex Market?

Foreign Exchange (Forex or FX is short for Foreign Exchange) are not traded on a centralized exchange. Therefore, there is no opening times, no exchange fees, no stock exchange rules, no SEC, no last price, etc. Foreign currencies are traded directly between banks and brokers together to set prices. As the foreign exchange markets are very large, the prices are very transparent and very small spreads.

Foreign currencies can be traded continuously (24/24). Most brokers offer you from Sunday evening through Friday evening prices. Forex prices are quoted in decimals. The decimals are called in Forex jargon “pips,” the smallest possible price change.

Forex is traded at fixed currency pairs (eg EUR / USD, GBP / USD). The first currency is always the base currency (eg EUR in currency pairs, EUR / USD). Standard contracts have a value of 100,000 units in the base currency. Mini contracts have a value of 10,000 units. Micro contracts have a value of 1,000 units. Mini-micro contracts are ideal to learn about the forex trading because of the small contract losses remain always low, even for extreme price fluctuations.

Every day is traded a volume of more than $ 2.5 trillion in foreign exchange markets. This is equivalent to 75 times of the daily volume of Nasdaq. 80% of trade is in the so-called majors, 20% in the “exotic” currencies. When Major called the following currencies: USD, JPY, EUR, GBP, CHF, CAD and AUD. The number of currency pairs available to you depends on your broker. WH SelfInvest you for example, offers about 130 different pairs.

To open a Forex position, you must keep a certain percentage of the nominal value in your account, usually 1%. For more information, see the “cover & handle.

What makes the Forex so interesting?

High liquidity. In the majors at any time day or night.

Large volatility. The Forex is a very volatile market, the EUR / USD fluctuates on average by 120 pips per day. The market is generally very active, which gives the trader a lot of interesting opportunities.

Leverage possible. The lever is i.d.R. at 100:1, was the capital that are provided for the active trading has reduced considerably. However, the use of excessive lever not good. So do not act with too little account. An account size of EUR 2500 is a minimum.

You can find out a lot of interesting information at FXStreet.com

Some brokers provide you with contracts and micro mini contracts are available with which you can trade with low risk in the real market.

The Forex trading is both in short and long periods in relatively simple. Fundamental analysis based on corporate balance sheets are not necessary, and there are many relatively high-quality information.

The Forex market is open 24 hours a day, 5 days a week. So then you can trade when you want and need to be considered no opening times.

Time zones and volume

Below you can see the different times at which the Forex market is active in different time zones, more or less. Between 14.00 and 16.30 clock clock Central European Time, the volume of the Forex market is the largest.

The value of a currency relative to another depends on many factors, mainly the strength of local economy and the monetary policy of central banks. The following numbers are for the forex trader especially important. Monetary policy: The results of the meetings of central banks in the U.S., Japan and the EU. The question is: If interest rates increased or decreased? This has an impact on inflation and thus the value of a currency. The economic developments: Determining factors include gross domestic product and unemployment.