What is the Foreign Exchange Market
The foreign exchange market, or the forex market for short, is a global financial marketplace where currencies are bought and sold against each other. The total daily turnover of the global forex markets is made up of every foreign currency exchanged for another, whether it's between market makers such as big banks or just individuals. It may sound huge, but the way it functions, unlike other financial markets, is quite simple. Therefore it's easy to learn the basics of foreign exchange markets trading. Currencies are bought and sold for each other at a certain rate. If you open a trade buying a currency when it's low and selling it when it's high, you make a profit on your investment capital, i.e. you make money. It's as simple as that. The only tricky part is knowing what moves the foreign exchange market, how the different factors affect it, and in which direction it will move next.
One of the basics that you need to know are the forex market hours. Unlike other world markets, the forex market is open 24 hours a day, so you don't have to worry about what time the market will be opening. Although it's open all the time due to the four different world trading sessions, you should only monitor the market closely during the busiest sessions which are the New York and London sessions. The official recommended time to trade is when these two sessions overlap, however the market can move quite a lot even when only one of these sessions is taking place. The weekends are market holidays and there is no trading activity going on.
One of the other appealing characteristics of the forex market is that most dealers offer leveraged trading. Leverage is a kind of lending procedure in which the dealer multiplies your investment by as much as 400 in order for the slight moves in currency rates to make you significant profits. Be careful because leveraged trading is much riskier than unleveraged trading, although the potential returns are greater too.
You are lucky to be interested in the foreign exchange market at this particular time because there are so many free forex resources available at eToro and other online forex sites. You can easily find a free forex market browser, a free currency converter, a free forex rates widget and educational materials such as guides, tutorials and glossaries that'll teach you to spot forex trends and catch swings in the market. You can even find a list of the top 100 forex resource sites to help you with your search!
Go to www.eToro.com to learn more about the forex markets!