If you were wondering; forex trading is nothing more than

direct access trading of different types of foreign currencies.

In the past, foreign exchange trading was mostly limited to

large banks and institutional traders however; recent

technological advancements have made it so that small traders

can also take advantage of the many benefits of forex trading

just by using the various online trading platforms to trade.

The currencies of the world are on a floating exchange rate,

and they are always traded in pairs Euro/Dollar, Dollar/Yen,

etc. About 85 percent of all daily transactions involve trading

of the major currencies.

Four major currency pairs are usually used for investment

purposes. They are: Euro against US dollar, US dollar against

Japanese yen, British pound against US dollar, and US dollar

against Swiss franc. Right now I will show you how they look in

the trading market: EUR/USD, USD/JPY, GBP/USD, and USD/CHF. As a

note you should know that no dividends are paid on currencies.

If you think one currency will appreciate against another, you

may exchange that second currency for the first one and be able

to stay in it. In case everything goes as you plan it,

eventually you may be able to make the opposite deal in that

you may exchange this first currency back for that other and

then collect profits from it.

Transactions on the FOREX market are performed by dealers at

major banks or FOREX brokerage companies. FOREX is a necessary

part of the world wide market, so when you are sleeping in the

comfort of your bed, the dealers in Europe are trading

currencies with their Japanese counterparts.

Therefore, it is reasonable for you to believe that the FOREX

market is active 24 hours a day and dealers at major

institutions are working 24/7 in three different shifts.

Clients may place take-profit and stop-loss orders with brokers

for overnight execution.

Price movements on the FOREX market are very smooth and without

the gaps that you face almost every morning on the stock market.

The daily turnover on the FOREX market is somewhere around $1.2

trillion, so a new investor can enter and exit positions

without any problems.

The fact is that the FOREX market never stops, even on

September 11, 2001 you could still get your hands on two-side

quotes on currencies. The currency market is the largest and

oldest financial market in the world. It is also called the

foreign exchange market, FX market for short. It is the biggest

and most liquid market in the world, and it is traded mostly

through the 24 hour-a-day inter-bank currency market.

When you compare them, you will see that the currency futures

market is only one per cent as big. Unlike the futures and

stock markets, trading currencies is not centered on an

exchange. Trading moves from major banking centers of the U.S.

to Australia and New Zealand, to the Far East, to Europe and

finally back to the U.S. it is truly a full circle trading

game.

In the past, the forex inter-bank market was not available to

small speculators because of the large minimum transaction

sizes and strict financial requirements.

Banks, major currency dealers and sometimes even very large

speculator were the principal dealers. Only they were able to

take advantage of the currency market's fantastic liquidity and

strong trending nature of many of the world's primary currency

exchange rates.

Today, foreign exchange market brokers are able to break down

the larger sized inter-bank units, and offer small traders like

you and me the opportunity to buy or sell any number of these

smaller units. These brokers give any size trader, including

individual speculators or smaller companies, the option to

trade at the same rates and price movements as the big players

who once dominated the market.