The Forex Market is quite a huge monster and there are many more things you might want to know about it. Some of the following info is crucial to know, some is just interesting stuff you might find useful.
Forex Market is the biggest market in the world. The average daily turnover exceeds 4 trillion USD – DAILY ! The average constantly grows, for example its 20% more than it was in the year 2007. The huge amount of operations executed daily make it also the most liquid market in the world. In other words, there is always someone willing to buy what you sell or vice versa. Read also: Types of Charts in Technical Analysis in forex market
Forex offers huge profit potential - I do not think there is any other LEGAL business that would compare to the ROI you can achieve on the Forex markets, except for maybe commodities or stock exchanges, but that is quite similar form of business. There is one good reason for this and it is called LEVERAGE. Simply put, the Forex markets offer the option to control (buy or sell) a big amount of any given currency with a relative low amount of your own money, which is called a MARGIN. I will address this later in a separate article. Read: Candlestick Hammer and Hanging Man.
but let me give you a very simple example to explain how this works. Lets say a broker offers you leverage effect of 1:50, this means you will be able to control a contract in the size of 100 000 USD (for example) with an investment of only $2000 of your own money. Those 2000 dollars is the margin. Simply put, you will be able to operate a portfolio with 50 times higher value than the actual investment you made, which means a 50 times bigger chance of profit … BUT … it also means a 50 times bigger possible loss. As you can see, the leverage effect can work for you but also against you.
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You need a broker to trade on the Forex market – to trade on the forex, you need to use the services of a broker. There is a simple reason for that – imagine that thousands of individual traders would like to have their private access to the markets, it would be one huge zoo. Thats why there are brokers who serve as access points for small traders, processing their orders and executing them directly on the forex market. Each broker also controls the activities of a certain trader, constantly monitoring the availability of funds etc. Every broker will provide you with a trading platform (some software application) and a number of tools you might find handy while trading. Read Non Farm Payroll in US
Forex Market Speculators are not loved by everyone – traders who only trade on the Forex to gain financial gain are called speculators and not everybody likes what they do. There are several economists or politicians who openly criticize the actions of speculative traders. Many call them abusers of the system who gamble with money that does not even belong to them. While there is a bit of truth on this statement, trading on Forex market is a legitimate business and is open to anybody. Even to those who criticize it.
Refference
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