By admin | December 15, 2008 - 3:05 am - Posted in Articles

The forex or Foreign exchange market is the largest and most liquid financial market in the world. Its existence is due to the need for trade of one currency for another. The forex has a twenty-four trading day (except on weekends) and a large variety of traders to meet the supply and demand of the market. Many large banks, multinational companies, governments and other financial markets utilize the forex, due to its use of leverage and low margins. Although, fiscal and exchange rates can affect the foreign exchange, as other markets, the forex remains strong.

Currencies traded against one another and each pair of currencies constitutes an individual product. Every currency on the foreign exchange utilizes an ISO 4217 international three -letter code with which the price of the unit expressed. The pairs of currencies separated into two groupings: base and counter to determine the worth of currencies. The first currency in the pair called the base and considered the stronger currency. The second currency named the counter currency is the weakest of the pair. In the forex market, what affects one of the currencies affects the other in the pair. Also known as currency correlation, this is what keeps trading strong and the value of the currencies to change.

The foreign exchange market has longer hours for trade and only slows down for weekends. This allows active traders on the forex to choose the times they want to trade. Commodity trading is done at all times of the day and they extend hours for US trades. Transaction costs for trading on the Forex market is the different between the buy and sell price of each currency pair and there are no brokerage fees. There are transaction costs incurred with both the stock and commodity market.

With the large variety of traders, utilizing the forex completion is fierce and the traders have many obstacles to overcome to become successful in the foreign exchange. The traders need to be fluent on the market standards and up and downs. Know the art of buying and selling commodities on the exchange will make or break a forex broker. Anyone can open a Forex trading account for $300.00 and start trading, but be sure this is a well thought out decision. After all, the financial trading markets can be very tricky.

Many large financial institutions, multi-national companies and other exchanges utilize the many advantages of the Foreign exchange market. The use of leverage is dependent on your account size and some have been shut out of trading due to leverage. The commodities trades in the foreign exchange are the most affected by leverage and can be very risky.

The forex is a vital part of international trade and an integral part of US relations with other countries. The world would be in a state of confusion without the Foreign exchange.

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