The Basics of Forex Market Trading Explained

The Basics of Forex Market Trading Explained

by Samuel Gibsten

If you think that the largest financial market in the world that sees the most financial activity each day are the the stock markets around the globe, you are mistaken. The market that sees the most money changing hands on a day to day basis is the foreign exchange market, otherwise known as the forex market. What people buy and sell in this incredibly active international exchange is the currencies of the world. While all currencies can be bought and sold in the forex market, it is five major global currencies that account for the major portion of the trade that transpires.

Major Forex Trading Cities of the World

While there is are centralized locations specifically set aside for forex trading, there are areas of the globe that are universally recognized as major forex trading centers. New York, London, Paris, Hong Kong, Frankfurt and Singapore are all cities that have a heavy amount of forex trading taking place in them.

The Major Players

While anyone can take part in forex trading, it is large banking institutions and major multinational corporations that are the most heavily involved in it. Why is this so? The answer to that question is that they really have no choice. These entities have huge sums of capital and if it just left in a bank account, it will eventual depreciate in value over time.

Huge Profit Potential

By moving it around and exchanging it for different major currencies of the world, if it is done right they can stay ahead of the curve, so to speak, and see the value of their cash holdings, in fact, increase over time. In recent years however, more smaller investors have discovered forex trading and with margin accounts or leverages as high as 200 -1, its easy to see how someone can make a lot of profit if they understand how the game is played.