Forex | Foreign Exchange

What is Forex?

2006-04-28T02:47:00.000-07:00

The foreign exchange (currency or forex) market exists wherever one currency is traded for another. It is by far the largest market in the world, in terms of cash value traded, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. Retail traders (small speculators) are a small part of this market, and may only participate indirectly through brokers or banks.

How to Play Forex

2006-04-28T02:46:00.000-07:00

The investment environment is as harsh and unforgiving as is the arctic landscape.
Awesome splendor conceals threat and ruin.
Only a select few with the proper mix of character, values, vision, expertise and resourcefulness succeed in such an environment.
Foreign Exchange (Forex) is the simultaneous buying of one currency and selling another currency in pairs. It is a currency trading that is very popular nowadays and is considered as a promising investment with a high percentage profit. Of course, a high risk lies behind this kind of investment. Luck, money management, logic and market analysis play a very important rule in this area to make a profit. Speculation may give you a high returns from your trading, but it can make you lose your money in no time as well. Forex is like a two sided knife. It makes you rich fast, but it makes you lose faster.
There are many brokers offering online trading platform so that you can trade in a real time basis from Monday to Friday. Some platform use so called leverage which means that you have a purchase power on a level of your leverage. For example, 1:100 or 1% leverages means that your $1 has a purchase power of that $100. This is why Forex can make your investments have a high returns comparing with 1:1 leverage.

There are many traders trade without money management and knowledge of market analysis still makes profit from this platform by using a forecast. Forex forecast may become a good forecast to predict how the market will move and make a transaction to gain profit. These forecasts are usually made by Forex trader using many kind of analysis. You probably want to consider using this as one source of gaining profit.

Foreign Exchange Broker

2006-04-28T02:45:00.000-07:00

Retail forex brokers handle a minute fraction of the total volume of the foreign exchange market. According to CNN, one retail broker estimates retail volume at $25-50 billion daily, which is about 2% of the whole market. CNN also quotes an official of the National Futures Association "Retail forex trading has increased dramatically over the past few years. Unfortunately, the amount of forex fraud has also increased dramatically."

Standard retail services include 24-hour online currency trading, and 100-to-1 leverage. Most retail brokers do not provide direct access to the interbank market, acting as dealers (buying or selling against the customer's order for their own account) rather than as true brokers (arranging a trade for the customer with a third party). The brokers earn money by offering a bid/offer spread that is wider than the interbank spread. Retail traders should be aware of the possibility of forex scams and that retail forex brokers may manipulate quoted spot rates, improperly trigger their clients' stop-loss orders or charge hidden fees.

According to the Wall Street Journal (Currency Markets Draw Speculation, Fraud July 26, 2005) "Even people running the trading shops warn clients against trying to time the market. 'If 15% of day traders are profitable,' says Drew Niv, chief executive of FXCM, 'I'd be surprised.' "

In the US, "it is unlawful to offer foreign currency futures and option contracts to retail customers unless the offeror is a regulated financial entity" according to the Commodity Futures Trading Commission. Legitimate retail brokers serving traders in the U.S. are most often registered with the CFTC as "futures commission merchants" (FCMs) and are members of the National Futures Association (NFA). Potential clients can check the broker's FCM status at the NFA. Retail forex brokers are much less regulated than stock brokers and there is no protection similar to that from the Securities Investor Protection Corporation. The CFTC has noted an increase in forex scams