Forex Trading for Dummies

Forex Trading for Dummies

If you have never heard of Forex before, then this article that could be called Forex For Dummies will begin to tell you all about it. Forex is a word made up of two words: Foreign Exchange, thus Forex is all about trading currencies. Trading currencies is what permits a business to exchange their currency to a foreign one. For instance a European maker of goods will pay a US business for parts in US dollars, even though their currency is the Euro. Once the province of the world's largest banks, as well as assorted billionaires, Forex can now actually be traded by "Joe Blow" in the privacy of his own home on his home computer. I can hear your comment now, "But I don't know anything about foreign exchange!"
Part of the attraction of Forex is that learning the ins and outs of Forex is made relatively easy by the number of tutorials available, and the fact that so much information is readily available on the Internet. There are a number of reasons why Forex trading is exciting too, for instance:
* No geographical impedance: It does not matter where a trader is located, whether in the Alaskan wilderness or in the Gobi desert, as long as there is a good Internet connection, trading can be performed.
* Uninterrupted business process: The foreign exchange market is open and performing business 24 hours a day, except on weekends, thus it is an uninterrupted process, unlike the stock market which closes every day.
* Liquidity: Because there is a constant demand for foreign currency exchange, the market is inherently liquid.
* Diversity of the dynamic: The foreign currency market is affected by weather, politics, economic growth or decay, inflation, destabilization of governments, interest rates, business cycles and trends, and employment/unemployment, to name only a few.
* Leverage: The foreign currency market lends itself more to the use of leverage than any other type of market, thus clearing the way for huge profit margins with low investment accounts.
Considering how many factors can affect the currency market leads investors to make predictions on the exchange rates constantly. The predictions often entail the use of algorithms since supply and demand of funds can be predicted with a good degree of accuracy. What this means is that in essence there are computer programs used to make investment decisions, thus creating software robotic management.