What Is The Foreign Exchange (FOREX) Market?

There is a lot to discover about the foreign exchange (forex) market and you will need to understand how it works if you plan to take practical steps towards becoming a successful forex trader.

You will come across several different terms for the forex market. Forex and fx are both short ways of saying 'foreign exchange'. It may also be called the currency market, the foreign currency market, the currency trading market, etc. All of these terms refer to the same international market on which the currencies of the world are exchanged and traded.

The forex market is not situated in one particular place. Practically every country is involved so there is a possibility of trading currencies in most countries. Because of this, the market runs 24 hours a day, five days a week. The week starts on Monday morning in Sydney, Australia (that is, 5 pm Sunday EST in the USA) and ends at 4 pm EST on Friday in New York. During that time it is always possible to trade currencies somewhere in the world.

The forex market is a surprisingly recent phenomenon. Up until the 1970s, currencies had been stable relative to one another since the second world war. What was called the 'gold standard' gave every currency a value in relation to the US dollar. This system was introduced in order to maintain a stable world economy.

However, in the early 70s the USA abandoned the gold standard and the values of the different currencies began to change. Banks immediately began to exchange currencies for profit, buying low and selling high, instead of only making exchanges when they needed to transfer money from one country to another. In effect, each currency became a tradeable commodity. This was the beginning of forex trading.

The value of a currency is, in a sense, the value of the nation whose currency it is, so just like companies on the stock exchange, if a nation is successful the value of its currency increases and if it is going though a crisis the value drops. These fluctuations can be great and can happen very fast. The sums involved can be huge too. The total value of transactions on the forex market now averages almost $2 trillion dollars a day.

The market is still dominated by international and investment banks, major corporations and other large financial institutions. However, it is possible to trade as a private individual through a broker and with the rise of the internet this has become much more popular. There are now a large number of people involved in forex trading through their home computers, although because they trade much smaller amounts than the institutions, they only account for around 2% of the total forex market.

The most common exchanges involve the US dollar against other currencies (especially the euro, British pound, Japanese yen, Swiss franc and Australian dollar) but it is possible to trade any one currency against another. Many of the automated forex robots used by individual traders concentrate on lesser pairs such as the pound against the euro.

The foreign exchange market is huge and an individual trader can feel like a tiny ant dodging around the feet of elephants. But anyone can get into it if they have a little capital that they are willing to risk. Some brokers will let you start with as little as $250. Before investing any real money, however, it is best to practice with a forex demo account while you learn the foreign exchange basics.

Top 3 Most Popular Forex Robot Systems

Using forex trading robots in forex trading business has now been a trend in the market. This is because these robots give traders a lot of benefits. Forex software robots are great help in a trader's daily tasks and aside from that, it can also provide more profit which a trader needs. There may be a lot of forex trading robots around, but here are the top 5 most famous. Of course, its popularity may also depend on its performance.

1. FAP Turbo - it is popular because it is said to double up your profits. It is also a stand-alone system which gives the traders more time for other things. It has high trading activities with about 10 to 20 trades every week. And it trades on multiple currencies.

2. Forex Megadroid - this is known to be a steady worker. It may not be as sensational as FAP Turbo, but its performance is still of high quality. This robot is capable of predicting future trading movements. And it comes with a 60 day money back guarantee.

3. Forex IvyBot - this forex robot is also known to give profits to its master. This can also trade in multiple currencies. It also has a build-in loss prevention system which prevents a trader from losing that much money in a trade. It also performs well on draw downs.

Different robots have their own distinct feature. A trader can try a robot out and then decide which to purchase. It is critical to choose a robot that will handle all your trades. So, one must be sure that he or she is getting the best. Choose wisely.

Stock Trading Vs Forex Trading

There was recently a rally in the stock market. The global economy is almost out of the recession. The US economy that drives the world economy is showing signs of recovery despite record unemployment rate that is being expected to go down in 2010. Stocks are back!

Stock trading has always been the most popular form of investment. Buy and hold has been a proven and tested method of investment. There are many companies that have weathered the recession and there stocks are now poised for a rebound. In the last few years, forex trading has also come off age and many people started trading forex after the stock market crash of 2008.

So which is the better: stock trading or forex trading? Let's compare the pros and cons:

1. Forex is a 24/5 market which means that in the forex market you can see continuous action throughout the week except on the weekend unlike the stock market where stocks can only be traded during the day mostly 9:00AM to 4:30PM EST. What this means is that you can trade forex anytime of the day. If you have a day job, you can trade forex after hours.

2. More than 90% of the global forex transactions involve US Dollar. There are not more than 6 currency pairs involving US Dollar that are heavily traded. As compared to that there are more than 50,000 stocks registered in the US stock markets alone what to talk of those stocks registered in the London Stock Exchange, the Tokyo Stock Exchanges and other exchanges. So in forex trading, you only need to focus on a few currency pairs. The most heavily traded currency pairs are GBPUSD and EURUSD.

3. Forex brokers offers leverage as high as 100:1 as compared to 2:1 by stock brokers. So even a small price movement in the forex market can be profitable as compared to the stock market.

4. In forex trading, you can practice on your demo account until you get the rquired experience. Recent development of automated forex trading has made forex trading easy for people who have no previous experience of trading.

So if you compare stock trading with forex trading, you will find that fx trading is indeed the better option now. There is never a bear forex market. If one currency goes up, the other in the pair goes down. That's why FX Trading is being called the Recession Proof Business of the 21st Century. Don't wait for the economy to recover completely. This is the best time to trade forex!

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