Introduction to forex

Introduction to forex

by Michael Nessim

Forex..What a strange word for those who first hear about it..The funny thing is that forex is not indexed in the normal dictionary scanning many paragraphs..Even the one scanning the blogger we are writing in now. So,What is forex? and why is it that famous? My first meeting with forex i felt it is hard and strange and I will not be able to deal with or understand..And with further reading,I realized I was a bit wrong,and i enjoyed every minute I pass dealing with forex. Well..First thing to know,Forex stands for (foreign currency exchange trading) in forex you simply trade,which means you buy and sell,when you buy at a price and sell at a higher price you simply earn,but when you sell at a lower price you lose ( I think that rule is simple ) and It applies in forex because forex is simply trading. We said in forex we trade with foreign currencies.Not with ordinary goods..So what's the difference,and how do we trade with currencies? Is it true that i can simply do it? Well..Answers are available..and lets start with answering the last question..YES you can simple trade with foreign currencies (trade in forex) through firms that are called forex brokerage firms( we will review them later) They simplify the work for you and you will understand everything later. The next question we will answer is..Why trading with foreign currencies? The forex market is the largest market on earth and it has many advantages:

1-The most profitable as it is the world's largest marketplace..Forex accounts for 3.2 trillion dollars of trading per day,imagine how big this number is,and if you can not imagine let me tell you that the New York stock market( the biggest stock market on earth) accounts for 16 billion dollar per day ( Forex is 75 times higher) and London stock market accounts for 11 billion dollars per day.. From these information,you can imagine how much profit you can make out of forex Per day.

2-No need for a centralized location..traditional trading brings buyers and sellers in a centralized location ( called the trading floor) this was a great burden with those working in stock markets as they have to work full time..In forex,You simply work online,you just need good connection and go..You can work part time besides your normal career and your life will never get affected.Another advantage about that is the ability to access forex anywhere using your cell phone..It is open to everyone anytime

3-It is the world's most powerful and persistent market..regardless of the negative economic indicators. Currencies have some macro economic nature..Which gives them a great vice,They trend better than every other market..Which means,Other goods and commodities are easily affected and their prices and fundamentals change overnight without warning ( as what happened after September 11) but currencies as they are always and consistently needed they trend better and their market( which is called Forex) is much more stable and less random ( you can notice how interest rates change gradually and in small increments to understand what i mean..You can not wake up to find interest rates increased by 5 % suddenly)

From what we see above..Forex is the best market you can start to work with,This really supplies all what a small or large trader needs,profitable with minimum dangers that can be easily controlled.

But When did forex start to exist? Well..Forex started to emerge in 1978..Forex emerged when worldwide currencies were allowed to float according to supply and demand..And this explains the fundamentals of forex and what we are doing in it. In forex we are participating in the profitable fluctuations in world currencies..Everyday currencies rates and prices change a lot. and this makes forex a continuous source of ongoing transactions which would never stop( We need currencies to buy everything,So It will never happen that currencies won't get sold and bought everyday.And this makes our profits)

7 years after the gold standard was abandoned till 1995,forex trading was limited to banks and large multinational corporations. After 1995,and thanks to the technology revolution and the high speed internet connections that became nearly everywhere..Forex was available to everyone everywhere.

Because of risk manageability and the absence of geographic boundaries made forex the world's best market..It is open to everyone and you can start making money as soon as you understand its fundamentals and techniques..