Business Feature
Introduction to Forex Trading

The term Forex is derived from Foreign Exchange. It is the largest financial market and the fastest growing one.

A look at the advantages of Forex

Open 24 hours a day - The Forex market is open 24 hours daily. When the Asian market closes, the European market starts and is followed by the USA market and is continued by Asia market again the next day. Therefore the trader can make his decisions irrespective of the hour of the day

Greatest liquidity- Forex provides great liquidity and liquidity to the investor translates as the freedom to enter or exit the market at any time. There is always a buyer and a seller in the Forex market. Forex traders enjoy the ability to respond to breaking news immediately. Forex market is one that absorbs trading volumes and per trade size which dwarfs the capacity of any other market.

Chance at generating profit - In this market where the daily volume is around 1.5 trillion US dollars, one of the exciting advantages is the ability to generate profits whether in the bull or bear condition. Currencies are always traded in pairs, for example dollar/yen, or dollar/Swiss franc. Each trade involves the selling of one currency and the buying of another. There is always the potential for profit as there is always movement in the exchange rates.

Lower transaction costs - Trading Forex has another advantage of much lower transaction costs than other investment products. Unlike other markets Forex does not charge commissions. The cost of a trade is represented in a Bid/Ask spread established by the broker.

Excellent leverage- Forex trading is done in currency "lots." Each lot is approximately 100,000 U.S. dollars worth of a foreign currency. To trade on the Forex market, a "margin account" must be established with a currency broker. This is a bank account into which your profits will be deposited and losses may be deducted. Different brokers have differing margin account regulations, with many requiring a $1,000 deposit to "day-trade" a currency lot. Day-trading means that you will be entering and exiting positions during the same trading day. For longer-term positions, many brokers require a $2,000 per lot deposit. In comparison to other markets which may require a 50% margin account, Forex speculators excellent leverage of 1% to 2% of the $100,000 lot value. The trader can control each lot for 1 to 2 cents on the dollar

Excellent software - Many excellent software available with the Forex brokers for Forex trading informs you of your exact entering price just prior to execution. You are given the option of avoiding or accepting the slippage. The huge FOREX market liquidity offers the ability for high quality execution.

Internet trading - The elimination of the broker salesman lowers expenses and makes the process of entering an order faster and has eliminated the possibility for misunderstanding. Confirmations of trades are immediate and the Internet trader has only to print a copy of the computer screen for a written record of all trading activities. Internet brokers' computer systems are protected by "firewalls" to keep account information from prying eyes.

Interesting- Currencies have demonstrated substantial and identifiable trends always. Each individual currency has its own "personality," and each offers a unique historical pattern of trends, providing diversified trading opportunities within the spot Forex market.

Focus - In Forex trading instead of attempting to choose a stock, bond, mutual fund or commodity from the tens of thousands available in those markets, a Forex trader generally focus on one to four currencies. The most common and most liquid are the Japanese Yen, British Pound, Swiss Franc and the new EURO. Highly successful traders have always focused on a limited number of investment options. Beginners can start by concentrating on one currency and move on to others.