The Off Exchange Retail Foreign Exchange Market is commonly referred
to as the "FOREX" or "FX" market, and is the
largest and most liquid financial market in the
world, with a daily turnover of over US $1.5
trillion. By comparison, the New York Stock
Exchange
average daily dollar daily volume for 2004 was
US $46 billion. Forex involves the simultaneous
buying of one currency and selling of another
traded in pairs, for example Euro/US Dollar (EUR/USD)
or US Dollar/Japanese Yen (USD/JPY). Simply put,
Forex is the world currency market. The value of
each country's economy is reflected in its
currency, so trading FX is like trading the
value of countries rather than companies or
commodities. It's not new. Currency speculation
has been widespread since WWII among the world's
banks.
Retail currency trading by individuals and
organizations attempting to profit from
constantly changing currency prices accounts for
up to a quarter of Forex volume. Other
transactions include currency swaps by major
corporations and central banks to convert
profits or hedge against currency price
movements.
Greater than 85% of all daily transactions
involve trading of the 7 "Major" currencies,
which include the US Dollar, Japanese Yen, Euro,
British Pound, Swiss Franc, Canadian Dollar and
Australian Dollar. The best trading
opportunities for speculators are with these
most commonly traded (most liquid) currencies,
As a 24-5.5 market Forex trading begins in
Sydney and in turn opens around the globe as the
business day continues, first to Tokyo, London,
and New York. Unique among financial markets,
investors can respond to currency fluctuations
caused by economic, social and political events at the
time they occur - day or night, in real time.
The FX market is considered an Over The Counter
(OTC) or 'interbank' market, due to the fact
that Forex transactions are conducted between
two counterparts over the telephone or via an
electronic network, so trading is not
centralized as on an exchange.
Whether you are a seasoned pro or beginner, the
FX market has characteristics that are favorable
over other markets:
·
The world's most liquid
market
·
24 hour a day trading from Sunday 5:00pm Eastern
to Friday 4:30 pm Eastern
·
Low trading costs (no commissions and tight spreads in
major markets)
Recent technology has broken down the barriers
that used to stand between the end-users of
foreign exchange services and the interbank
market. The online trading revolution opened its
doors to retail clientele by connecting market
makers and market participants in an efficient
low cost manner. In essence, online trading
platforms serve as gateways to the liquid FX
market. Average traders can now trade alongside
the biggest banks in the world, with virtually
similar pricing and execution. What used to be a
game dominated and controlled by the "big boys"
is becoming a more level playing field where
individuals can profit and take advantage of the
same opportunities as big banks.
However,
in these volatile markets, substantial losses
can still occur just the same.
FX is no longer
an old boys club, which means opportunity
abounds for aspiring online currency traders.
There are many other features that may convince
you that this could be the arena in which you
would like to invest. In fact, so far, we've made it sound
pretty easy, haven't we? As you must know by
now, nothing with such huge reward potential is
easy. With big payoffs come substantial risks,
and you have to understand how to minimize them.
THINGS
YOU SHOULD KNOW BEFORE TRADING; Please read in it's
entirety.
THE RISK OF LOSS IN
TRADING FOREX CAN BE SUBSTANTIAL. YOU SHOULD
THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS
SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL
CONDITION. THE POSSIBILITY EXISTS THAT YOU COULD
SUSTAIN A SUBSTANTIAL LOSS OF FUNDS AND THEREFORE
YOU SHOULD NOT INVEST MONEY THAT YOU CANNOT AFFORD
TO LOSE.
THE HIGH DEGREE OF
LEVERAGE THAT IS OFTEN OBTAINABLE IN
FUTURES/COMMODITY TRADING CAN WORK AGAINST YOU AS
WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO
LARGE LOSSES AS WELL AS GAINS.
Past
performance is NOT indicative of future results.
The information contained herein should not be
construed as an offer to buy or sell commodities,
futures, FOREX or any investment. The information
contained herein is intended for informational
purposes only. Longview Investment Trust, LLC
highly recommends that before making a decision, the
reader collects several opinions related to the
decision and verifies facts from at least several
independent sources.
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