Forex, or Foreign Exchange, is known to most people as the window in the bank where you go when you need some foreign cash for your upcoming vacation. And the bank, being a service oriented and helpful to society entity, happily changes your funds for only 2.0 cents commission or a little more on every dollar. Aren’t the banks nice?? Well, actually, Forex is the market that the banks themselves use to exchange their funds with other banks and institutions on a daily basis, at about 0.02 cents commission.

This Forex market has now become accessible to the average person, like you and me. Forex is the World’s Largest Market, with a massive daily average turnover in excess of US$1.4 trillion, making it bigger than the combined total of the world’s stocks and bonds markets.

Foreign Exchange can be described as the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example (EUR/USD) Euro and US Dollars or (USD/JPY) US Dollar and the Japanese Yen.

There are 2 main reasons Forex is bought and sold:

1. Governments, Companies & Banks buy or sell currencies
    for their day-to-day business activities.

2. Traders like you and me buy and sell currencies for profit
    as speculators.

This 24 Hour market begins trading each day in Sydney and moves around the globe as the business day begins in each financial center, first to Tokyo, then London and finally New York. Unlike any other financial market, investors can take advantage of currency fluctuations as they occur, any time of the day or night.

The FX market is considered an Over The Counter (OTC) or ‘interbank’ market, as transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets.

Understanding Forex Quotes

• The first currency listed is the base currency.
• The value of the base currency is always 1.

Example: (EUR/USD) 1 Euro = 1.2925 US Dollars

Why Trade Forex?

This new market gives you the ability to trade literally anywhere, anytime. Capitalize on new technologies, and reduce your costs of trading dramatically by cutting out the middleman, as seen in the ‘old markets’.

Low Margin requirements enable you to leverage, (control large contracts with a small amount of capital. Warning: This can not only increase the potential profit in trading but also increases the risk of loss.)

Learning to develop and trade a simple trading plan will aid in your ability to reduce potential risks and in turn, increase potential profits. See the TTC Trading School and Steps to Becoming a Trader to get on your way.