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What is FOREX?

The Foreign Exchange or FOREX Market is the largest and most liquid global financial market. Transactions in the FOREX market involve the buying of one currency and selling of another currency simultaneously. FOREX trading is always done in currency pair. An example of a FOREX trade is to buy the Euro while simultaneously selling the US Dollar; if the Euro indeed appreciated against the US Dollar, traders will have profited from this trade by closing the position, meaning selling back the Euro and buying back the US Dollar simultaneously.

The FOREX Market is an over-the-counter (OTC) market, which means there is no central exchange or clearing house where orders are matched. FOREX Dealers around the world are linked to one another around the clock via telephone, computer and fax, creating one cohesive market. This allows the FOREX market to operate on a 24-hour basis.

The FOREX market is also not limited to one location, it consists of a vast network of financial institutions, corporations and individuals throughout the world spanning from one time zone to another in all the major financial centers, with the three major centers being London, New York and Tokyo. More than 95% of all the FOREX transactions are speculative in nature. The rest belongs to hedging and other activities. FOREX trades are non–delivery trades: currencies are not physically traded, but rather these transactions involve currency contracts that are agreed upon.

WHY FOREX?

The Foreign Exchange Market is a non-stop Global Financial Platform with a daily turnover of USD 3.5 Trillion (source: Bank of International Settlements - www.bis.org). The FOREX market has become the world's largest financial market. Prior to the late 1990’s, with the large minimum deal sizes and rigid financial requirements, the FOREX market was not accessible to the retail traders or individual investors.

However, technological advances and the advent of the internet have finally made it possible for retail traders to engage in FOREX trading. In today's FOREX market, the dollar relentlessly fluctuates against the other currencies of the world. A number of factors, such as the decline of worldwide equity markets and declining world interest rates, have motivated investors to look for alternative investment opportunities.

The escalation in global trades and overseas investments has also led to scores of national economies becoming interlinked with one another. This interconnection and the consequential fluctuations in exchange rates have shaped a mammoth intercontinental market: FOREX.

For countless investors, this has presented attractive profit opportunities. The FOREX market offers unparalleled potential for rewarding trading in any market condition or any stage of the business cycle. These combined factors have brought about many advantages.

Advantages & Features of FOREX
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FOREX trading, like trading of any other financial instruments, though allows high potential profits, also comes with high risks. It is only possible to gain success in FOREX trading after a professionally structured training in FOREX trading, after one is equipped with the necessary and sufficient financial intelligence – knowledge and skills, to enter and exit trades, as well as to manage the associated risks.

Disclaimer:
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. JF Lennon & Associates. will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.