The Market

The currency trading market is the biggest and fastest growing market on earth. Its daily turnover is more than 2.5 trillion dollars. The participants in this market are central and commercial banks, corporations, institutional investor, hedge funds, and privat individuals like you.

What Happens in The Market Club

Markets are places where goods are traded and the same goes with Forex. In Forex markets, the goods are the currencies of various countries as well as gold and silver. For example, you might buy euro with US dollars, or you might sell Japanese Yen for Canadian dollars. It's as basic as trading one currency for another. Of course, you don't have to purchase or sell actual, physical currency: you trade and work with your own base currency, and deal with any currency pair you wish to.

Leverage is The forex Advantage

The ratio investment to actual value is leverage. Using a $1000 to buy a Forex contract with a $100,000 value is leveraging at a 1:100 ratio. the $1,000 is all you invest and all you risk, but the gains you can make may be many times greater.

How Does One Profit in the Forex Market

Obviously, by low and sell high. The profit potential comes from the fluctuations in the currency exchange market. Unlike the stock market, where share are purchased, Forex trading does not require physical purchase of the currencies, but rather involves contracts for amount and exchange rate of currency pairs. The advantageous thing about the Forex market is that regular daily fluctuations in the the regular currency exchange markets, often around 1% are multiplied by 100 ( Forex brokers will offer varying ratios in exchange rates. For example, Easy-Forex, one of the more reputable online brokers, will offer trading ratios from 1:50 to 1:200, depending on the currency trading pairs).

How Risky is Forex trading

You cannot lose more than your initial investment (also known as margin ). The profit you may make is unlimited, but you can never lose more than the margin. You are strongly advised to never risk more than you can afford to lose.

Market Club Making

Since most Forex deals are make by individual and organization traders, in conjunction with market makers, it's important to understand the role of the market maker in the Forex industry. A market maker is the counterpart to the client. the market maker does not oprate as an intermediary or trustee. A market maker performs the hedging of its clients' positions according to its policy which includes offsetting various clients' positions, and hedging via liquidity providers and its equity capital at its discretion. Banks, for example, or trading platforms ( such as Easy-Forex ), who buy and sell financial instruments make the market. That is contrary to intermediaries, which represent clients, basing their income on commission. By definition, a market maker is the counterpart to all its clients' positions, and always offers a two-sided quote ( tow rates: BUY and SELL). Therefore, there is nothing personal between the market maker and the customer. Generally, market makers regard all of the positions of their clients as a whole. They offset between clients' opposite positions and hedge their net exposure according to their risk management policies and the guidelines of regulatory authorities. Market makers are not intermediaries, portfolio managers, or advisors, who represent customers while earnings commission. Instead they buy and sell currencies to the customer, in this case the trader. By definition, the market maker always provides a two-sided quote ( the sell and the buy price ), and thus is indifferent in regards to the intention of the trader. Banks do that, as do merchants in the markets, who both buy from and sell to, their customer. The relationship between the trader and the market maker ( the bank, the trading platform; Easy-Forex, etc.) is simply based on the fundamental market forces of supply and demand.