   
Foreign Exchange
Market
Foreign Exchange
(Forex) is the arena where a nation's currency is exchanged for that of another.
The foreign exchange market is the largest financial market in the world, with
the equivalent of an estimated $4.3 trillion changing hands daily and growing;
more than six times the aggregate amount of the U.S. Equity and Treasury markets
combined. Unlike other financial markets, the Forex market has no physical
location and no central exchange.
Benefits of
Trading the Forex market
The Forex market trades 24 hours a day
5 1/2 days per week. The ability to sell first, and buy second. This is called
shorting the market
Leverage up to
200:1 without putting up collateral. The ability to trade without investment
capital needed up front leading to greater gains and losses The moves and
trends in this market can last for years and months while still providing plenty
of short-term opportunities for day traders
More historical
and trend data available for analysis. Liquidity, which improves order
execution.
Ability to take
advantage of world-wide economic and geopolitical issues that affect currency
valuations Ability to make money in any directional movements - Long/short. A
currency does not have to be increasing in value for it to be profitable
True
diversification. Unlike NYSE, where you only but the US dollar The ability to
focus on 4-6 major currencies instead of 1000's of stocks
Recession proof.
The Forex makes money on the movements (up/down) Impossible to manipulate the
Forex due to the size of the market and the fact that it is a non centralized
exchange
The ability to
get in and out of trades in minutes, or hours, or the ability to hold positions
for days, weeks, and even months. With larger sums of capital you have the
ability to hedge you risk across currencies using "carry trading techniques"
which make money on the interest rate differentials between the two currencies
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