24 Juni 2013

Forex Trading: Largest Financial Market

Forex (FX) trading has been for once the financial world's best-kept secrets.Despite being the largest financial market in the world, it should have been more well know, but has ecsaped under the rader of most people because of the secrecy that was once dominant in the industry, remaining sole domains of big banks, large corporations and other huge financial companies that apparently did not like giving out their information to the world.Investors from all works of life are hungry for new horizon,new markets to invest in, and forex was just primed for them to nose into. The advancement of technology has also made difficult for those large financial institutions to continue to hold onto their information without sharing them.

Other markets like stocks, futures or options do not trade forex, rather it is the large market through which currency is traded. Unlike other finanacial markets, where the business is conducted from a particular location, forex market is decentralised, it does not have a board that look after it actions, nor is there any kind of arbitration process if someone feels agrived by another trader. Members work things out pretty much on their won through the normal line of information dessemination, and credit type of agreements. If you must trade with each other on day to day basis, it behooves on each member to do so honestly and fairly. Self-Regulation is key to making a huge success in of the Forex market.

Day trading in Forex can almost be likened to vacation in respect to traders who deal on other financial products in other markets. Not only that the process of operation is less cumbersome in relation to other markets, it means less binding rules and regulations to adhere to when trading. For instance, in the FX market, there is nothing like "insider trading"-if one knows something that can be either harmful or benefitial to the exchange rate of any particular currency, he is at liberty to take advantage of that information at will. But such is not so, say like in the stock market where if you have equivalent information and you are transacting on the stack exchange, that activity will get you into trouble to say the very least.But Forex trading is not a simple walk in the park, where you can go into and make all the money easily, even with relaxed rules in place.

Daily transactions in Forex market is in excess of two trillion dollars from sunday to friday, which translates into twelve trillion dollars per week and six hundred and twenty four trillion dollars per annum.You may by now begin to have a mental picture of forex traders walking up to some building with boxes and brifcases full of money ready to exchange, trade or sell, but you should get few things in perspective. Forex market technically sells "nothing". Trades are done with computers, and may be described best as a "speculative market". One exchanges one currency type for another, for whatever reason that might need to be done, for example, payroll in a multinational corporation. Another thing you should know,especially if you think of Forex trading as way of diversifying you portfolio, is that currencies are traded in pairs, you can trade up to 100 times more than the amount you have in your account, unlike the stock market. One thing that must be known before going into Forex trading that you must be well equipt. Since the Forex trading thrives on being acquianted with information, as regards to the market, you must as a matter of compulsion acquire those information.

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