Forex

Ever since the creation of paper money, and eventually fractional reserve banking, currency trading (forex) has grown to become the biggest market in the world. Nearly every government issues its own currency (notable exception is the Euro), and these need to be exchanged whenever goods and services pass national borders.

Forex is traded all over the world, with trading markets are open 24 hours a day, 5 days a week. And the good news is that forex trading is not just reserved for large corporations, banks, or governments. Individuals can open a forex account of almost any size, and trade currency pairs nearly anywhere in the world, just from their computer.

With daily trading turnover over $5.1 trillion, forex is the most liquid market in the world. This liquidity often results in better prices. And unlike some other financial markets, traders can respond almost immediately to currency fluctuations or news events whenever they happen.

Unlike many markets, there are no fees or commissions to trade forex because the costs of trading are included in the bid-ask spread. And as in many markets, traders can speculate in both rising and falling markets, but with the advantage of there being no restrictions or additional costs for short-selling.

Warning: Forex is traded with varying degrees of leverage, allowing a trader to take a large position in the market with only a fraction of their capital being employed. Although leverage may increase the gains, it can also greatly increase losses, so it’s vitally important to understand the risks of trading on margin.