The word Forex is an abbreviation for The Foreign Exchange Market. This is
market in which all is bough and sold is money itself, which means that with certain currencies you can buy other kinds of currencies. It is largest and most liquid financial market in entire world. More than one trillion dollars exchange hands everyday on this market. It is a sea full of money with potential to make large and substantial profits. I explain on this article what Forex is all about and how it works. When talking about Forex Market following questions arise.
1) How much money can I make at Forex Market? A lot, you can make a fortune!
2) Can I loose money at Forex? Yes you do. In fact you can loose your entire portfolio just minutes after you start trading.
3) Is it volatile? Yes it is. It is very volatile.
4) Is it risky? Yes it is. It is very risky.
5) What is leverage at this market? The leverage is usually 100:1 on most firms but sometimes 200:1 and some firms offer up to 400: 1 leverage. This means that for every dollar that you have available for trading you can borrow up to 100 to trade. So with $1000 USD you can control $100,000 of currency. No other market gives you so much liquidity and so much leverage at same time.
6) How did The Forex Market begin? Currencies like dollars and sterling pounds were backed up by gold until 1971. After 1971 countries abandoned that norm and started to issue currencies as they pleased so Forex market originated where central banks could exchange their home currencies for other country currencies. That ensured certain security for banks in case their own currencies devaluated against one they were exchanging it for. So if a bank sold dollars and bought sterling pounds and dollar devaluated too much in relationship with sterling pounds, bank didn’t loose money, because they had bought large amounts of sterling pounds. Do not confuse Forex with money exchanging business. The money exchanging business dates back to thousands of years ago. People exchanged one kind of coin for another, silver for gold, etc. Today we exchange one currency for another through The Forex Market.
7) Why did nobody know much about Forex until recently? Until a few years ago only “big guys” could play this game. The initial requirement was that you could trade only if you had about ten to fifty millions to start. Remember that this was intended to be used by bankers and multinational corporations not “little guys”. Forex was widely opened to everyone on 90’s decade, a very few years ago. It is number one market in many different aspects. It is most liquid, largest and it is growing fastest than any other financial market in world. It attracts many new investors because of its large leverage and low starting funding requirement. Some firms let you start with a mini-trading account which reacquires only $300 - $350 to fund your account and start trading.
