Forex: An Intro to Currency Trading

The foreign exchange market, also known as forex or FX, is one very fast paced market around. Forex trading used to only be available to the wealthy individuals out there along side with huge corporations and financial institutions. But with our good old friend the internet, many more people have access to exchanging currencies through online brokerage accounts.

Price Fluctuation

Currencies are destined to fluctuate, but in general, the daily fluctuations in the forex market are pretty small. Many currency pairs will change up or down less than one penny a day, which is a representation of less than a 1% change in the currency’s value. This is why so many people are drawn to this type of market, because it is one of the less volatile around these days. With that said, many speculators out there are relying on the high amount of leverage available to increase the value of any potential changes. With higher leverage, there can be a lot more risk involved. But, since there is 24 hour trading and deep liquidity, brokers on forex are able to make movements more meaningful for traders (due to making high leverage the industry standard.)

Extreme Liquidity and High Leverage

Since there is so much liquidity and high leverage available, these two factors alone have helot in spurring the rapid growth of the market and have made the market a very ideal place for traders around the globe. It’s convenient when you can open and close positions within minutes or hold a position for months. One aspect of this market is that currency prices are based on supply and demand and are not able to be manipulated so easily since big players like central banks are not allowed to move any of the prices at will like in other markets.

Trading on the forex market can seem a bit daunting at first, but with research and education you can start feeling more comfortable about jumping in and exploring the world of currency trading. If you need more assistance, ThinkForex hosts live events and trading seminars which are a way for traders to gain experience and learn more about trading. There is plenty of opportunity in the forex market for investors. But, if you want to be successful, you must understand how the market works and the general basics behind the movements in currency. Start slow, and keep learning- perhaps you will become an expert in no time!