What is Forex?

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Investing in the foreign exchange (Forex) used to be the exclusive preserve of an elite group of hedge funds, investment banks and multinational corporations. These institutions guarded their turf fiercely and no wonder. Between 1990 and 2006, FX investments returned 9% a year, more than either bonds or equities over the same period.

But for individual investors, the FX market has been effectively off-limits: minimum trades were as much as $1 million, and there were a myriad of complex legal documents to review and sign, as well as extensive credit checks that were required before a bank would consider trading with you.

Over the past 15 years or so this has all changed. Thanks to the advent and growth of the Internet, online trading systems – which give ordinary investors direct access to the currency markets – it is now possible for the retail investment community to easily and quickly trade on the international FX markets from any internet capable PC.

If you’re new to foreign exchange, or forex, as it is commonly known, you’re probably wondering what makes it different from stock exchanges. Forex is both similar and different to stock exchanges. Here are some of the main differences:

Unlike the stock market, where money is traded for shares in a company’s stock, Forex is all about trading one type of currency for another. In both markets, you make money by following the same principle: buying low and selling high. However, the forex market differs from the stock market in that going long (betting on a rising price) or short (betting on a falling price) is equally easy.

You may have experience as a forex trader and not even know it: anyone who has traveled to another country and exchanged their home currency for the local currency has traded forex! Of course, the global forex market operates on a much larger scale, involving importers and exporters, multinational corporations, portfolio managers, hedge funds, and speculators. Some of these players are doing business in other countries, some are hedging one currency against another in order to prevent losses, and some are engaged in currency speculation – trying to predict and profit from favorable currency movements.

The forex market is one of the most exciting and trader-friendly markets in the world. Here are some other useful facts to know if you’d like to become a forex trader.

The Forex Market is Huge:
Thanks to its sheer size, it is almost impossible for any one person, institution or government to control the forex market for long. At an estimated $3.98 trillion plus, the average daily turnover of the forex market easily trumps that of the New York and London Stock exchanges put together.

The Forex Market Offers 24/5 Accessibility:
Forex trades can be made 24 hours a day, 5 days a week. The market runs non-stop from 20:15 GMT on Sunday until 22:00 GMT on Friday.

The Forex Market has Unrivaled Liquidity:
With its massive scale and 24/5 accessibility, forex is exceptionally liquid, making entering and exiting even very large positions comparatively simple. With massive corporations and central banks trading forex, there’s plenty of room for you, too!

There is No Central Control in Forex:
Forex has no centralized market or regulatory control. The Internet makes it easy to participate in forex via computers linked to brokers, banks and other traders around the world. Regulation is administered locally wherever banks and brokerages are registered, which means you enjoy the protection of local regulatory authorities without the limitations of central control.

Forex Offers Unparalleled Leverage:
Forex allows you to make big profits while risking small amounts of money. Here at “Maxrich Group LTD” you can trade with leverage as high as 500:1 if you want. But you don’t have to gear your trades that high if you prefer lower levels of risk.

Forex is Open to Everyone:
The forex market was once the domain of institutions and wealthy individuals. Thanks to the Internet, all that has changed. You can get started with as little as USD$10 at “Maxrich Group LTD”!

Legal Risk Disclosure: 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.