What are forex 2

What Are foreign currency Markets?

One country's currency is exchanged for that of another through a floating exchange rate system. It is the world's largest financial market, with an estimated daily average turnover of more than $1.5 trillion!

Foreign currency trading is not bound to any one trading floor, and is not a market in the traditional sense, but is done electronically, between a network of banks and other large financial institutions, continuously over a 24-hour period from Sunday afternoon to Friday afternoon.

Major foreign currency Participants.

Major foreign exchange participants include commercial and investment banks and central banks. Other participants include corporations, hedge funds and millions of traders worldwide. The top 7 banks which provide liquidity in this market include: Bank of America, Credit Suisse, First Boston, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, Dean Whiter, and UBS Warburg.

The Commonly Traded Currency Pairs.

Currencies are traded in pairs: for example, U.S. Dollar/ Japanese Yen or U.S. Dollar/Swiss Franc. Every position involves the buying of one currency and the selling of another. While there are scores of currency pairs to choose from, the following currency pairs due to their volume and liquidity in the market, they are called the 6 Majors:

(Each currency is listed by its name, symbol, and how it is paired with the dollar.)

Australian Dollar (AUD/USD)

British Pound (GBP/USD)

Canadian Dollar (USD/CAD)

Swiss Franc (USD /CHF)

Euro Dollar (EUR/USD)

Japanese Yen (USD/JPY)

Two Way Market.

In foreign currency market you may buy or sell currencies. The objective is to earn a profit from your position. You could make profits when the market was going up if you bought the market. You also could make profits when the market was going down if you sold the market.


The margin deposit is not a down payment on a purchase of equity, as many perceive margins to be in the stock markets. Rather, the margin is a performance bond, or good faith deposit, to ensure against trading losses. The margin requirement allows traders to hold a position much larger than the account value. It is decided by your brokerage firm.

Why Trade the foreign currency?

There are many benefits in trading the foreign currency. A few of them are:

It has continuous liquidity. It has very low dealing costs; 3-5 pip spreads. It has 100:1 (even 200:1 Mini Account) leverage for margin trading. It has a very volatile, trending market. It has a two-way market: traders participate in bull or bear markets. It is open 24 hours, from Sunday afternoon to Friday afternoon.

Risks You Must Know.

The foreign currency market is one of the most popular markets for speculation due to its enormous size, liquidity, and tendency for currencies to move in strong trends. An enticing aspect of trading currencies is a very high degree of leverage. Many brokerage firms allow positions to be leveraged up to 100:1 or 200:1. This speculation in the foreign currency market is not for every one. It should only be conducted with risk capital funds that if lost will not significantly affect one's personal financial well being.

Risk Disclosure: Futures and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one's financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure: Hypothetical performance results have many inherent limitations, some of which are described below. no representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

Testimonial Disclosure: Testimonials appearing on this website may not be representative of the experience of other clients or customers and is not a guarantee of future performance or success.

© Copyright 1995-2023 AbleSys Corporation. All rights reserved. Privacy Statement Address: 35111F Newark Blvd. Suite 506, Newark, CA 94560.