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Wednesday, September 24, 2008

What is Forex (Foreign Exchange Market)?

By Johnny Moon

More and more it seems that people are turning towards away from the stock market and towards forex to make big money. Why is that? What is forex and what makes it so lucrative?

Forex is an abbreviation for the foreign exchange market. The foreign exchange market is the largest financial market in the world and it consists of trades of one currency for another. How large is it? Over $4 trillion USD is traded per day. An example of a forex trade would be trading US Dollars for Euros (or visa versa.)

Unlike the stock market, forex is open 24 hours a day except on weekends. It's closed from 4 PM EST Friday to 5 PM EST Sunday. Why 5 PM EST Sunday? Because at that time it's Monday morning in Australia! This is a worldwide market and it's always business hours somewhere in the world.

All kinds of currencies are traded. The most traded currencies are as follows (in this order): United States dollar (USD), Euro (EUR), Japanese yen (JPY), Pound sterling (GBP), Swiss franc (CHF), Australian dollar (AUD), Canadian dollar (CAD), Swedish krona (SEK), Hong Kong dollar (HKD), Norwegian krone (NOK), New Zealand dollar (NZD), & the Mexican peso (MXN).

Forex is becoming more and more popular as a way for traders to "make their fortune" not only because it's open 24/7 but because you make a huge amount of money with a small amount of investment due to the large amount of leveraging possible.

Of course, as with "regular" stock trading, trading on the Forex markets requires a good knowledge of what you are doing and some good tools. If you go into Forex not knowing what you are doing, you are likely to lose your money.


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