The Forex Market- The Vortex of Trade



For those who are not familiar with the term, Forex Market refers to the Foreign Exchange Market where foreign currencies are traded.

The History

In 1971, the Smithsonian Agreement was signed in Washington. This ended the era of the fixed currency quoting rates and opened the door for currency trade where the exchange rate became dependent on the market supply and demand of currency.

Historically, the Forex Market was only available to major banks, large corporations and other participants trading in very large volumes and transaction sizes. Now, with the arrival of the internet and technology, trading foreign currency has become a very popular investment alternative for people with average means.

The Appeal of this Market

Many people have been drawn into this vortex of trade because of the Internet provides them with direct access to foreign currencies 24 hours a day. Plus, there is no insider trading, so no one has the upper hand in the market; the minute news becomes available, all forex traders are informed at the same time.

Another aspect of the Forex Market that makes it irresistible is the twist created by the small fluctuations constantly occurring in the price of currencies. Short-term investors find this type of investing particularly attractive due to the broad range of strategic endeavors available to them because of the ever-changing environment of the market.

The Basics

Learning to trade in the Forex Market is a unique experience in itself. As an investor, your first account will be a demo-account. These demo-accounts are created by online Forex brokers, and are also referred to as paper trades. This is the best way to learn about the market, which is why it is highly recommended that individuals become very confident in paper trading before moving on to trade in the actual market.

Trading in the Forex Market has become extremely popular primarily because the starting capital does not have to be an extravagant amount of money. In fact, the market requires less start-up capital than any other market. This aspect is particularly appealing to those who are interested in trading, but have very little money to start investing big. Depending on the broker, your initial investment could be as low as $300.

In addition, the Foreign Exchange Market is the largest liquid financial market. Trade within this medium reaches over a trillion dollars a day. The cash flow is so constant that no single investor can significantly affect the price of major currency. Due to the fact that trades can be opened and closed so quickly, there are always buyers and sellers.

It is this feature, i.e. the liquidity of the market, that allows investors to focus on and learn a few instruments or currency pairs as primary investments. This also helps the investor monitor this easily as 85% of all the transactions are made on the seven major currencies.

The Forex Market is available to anyone who has the desire to trade. Access to the internet is the first thing you should secure to get started in paper trading and begin learning the ropes of trading in the Forex Market. No wonder it has become such a whirlwind of activity in the eye of the trading storm.