Welcome to Interbank Currency Trading
Introduction to FOREX
The Foreign Exchange Market - better known as FOREX or "FX" is the world's largest and most liquid trading market for buying and selling currencies. The entire market is run electronically within 5000 trading institutions that handle a huge volume of money of transactions 24 hours a day, 5 days a week. It includes international banks, central government banks (such as the US Federal Reserve), and commercial companies and brokers for all types of foreign currency exchange. Daily exchanges are worth $ 1.5 trillion (US Dollars) - that is 30 times larger than the combined volume of all U.S. equity markets.
Everyday, more and more investors are turning to the all-electronic world of FOREX trading for income and profit because of its numerous benefits and advantages over traditional trading vehicles like stocks, bonds and commodities. FOREX trading is already accessible to small investors because of the changes in trading regulations. Before, traders were required to meet strict financial requirements and there was a minimum limit in transaction size. And people now also have the benefit of technological advancement so it is just so easy to enter FOREX trading. Even business companies can also use the market to buy and sell products in other countries.
So how does it work?
An investor is simultaneously exchanging one country's currency for another. The currencies are always traded in pairs - the US dollar against the euro or the Japanese yen against the English pound. Every transaction involves selling one and buying another and the price that is quoted is the exchange rate between the two currencies. In other words, simply the quoted price is how many of the one currency is worth one of the other. So if an investor believes one currency will gain against another, he will buy that one and sell the other one.
The probability for profit exists because there is always progress between currencies. Even small changes can result in considerable profits because of the large amount of money involved in each transaction. At the same time, it can be a relatively safe market for the individual investor.
There are many advantages to trading in FOREX and two of the most essential are liquidity and accessibility. Because of the enormous size of the Foreign Exchange Market, investments are extremely liquid. The high number of transactions each day means that there is always a buyer or a seller for any currency and international banks are constantly providing bid and keep on asking offers.
