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What is FOREX?

FOREX (Foreign Exchange Operations or FX) is an international currency market, or a set of conversion operations on purchase and sale of foreign currency on the specific conditions. The origin of the Forex market in its present form was in the 70s of the 20th century, when independently changing exchange rates were introduced. It meant that anyone from any country could now make currency transactions. The cost a particular currency was since than determined only by the current supply and demand in the currency market. Due to the changing rate introduction the volume of currency trading in the Forex market increased surprisingly quickly.

It is worth mentioning that back in 1977 the daily cash flow was approximately $5 billion, and in 1987 it increased to approximately 600 billion. There is no set trading place in the Forex market. Forex is a huge network of currency dealers interconnected by telecommunications and scattered all over the world's leading financial centers.

Forex trading is conducted via telephone and through computer terminals. The Forex market works twenty four hours a day. Due to the fact that its centers are located in different time zones, the foreign exchange market does not stop working all day long. Unlike other markets, in Forex there is no need to wait to react to an event, which is a significant factor that attracts many investors.

The Forex market is reliable because it is absolutely liquid. This Forex market’s peculiarity is defined by the huge amount of the daily conducted operations. Today this amount has exceeded one trillion dollars and continues to grow rapidly, what makes trading operations in Forex absolutely liquid.

There are several fundamental principles in Forex market trading, and every professional trader is aware of them. They include fundamental and technical Forex analyses, funds managing, strategy choosing, psychology of trading and brokers.

Fundamental analysis includes the development of market research, which is done by learning the economic data and event related to the currency exchanged. Part of this analysis may include interest rates and various news pertaining to industry or economics, politics or climate. The most natural method of predicting the behavior of Forex is fundamental analysis. Along with that, the technical analysis that considers mathematical market indicators and emphasizes the direct relationship between past and future market data can be applied. These indicators include various charts, quotes and Forex’s best indicators, both complex and simple.

Before opening up a real trading account, each Forex’s trader should choose one or several Forex’s trading strategies according to which he will trade and make deals. Of course, everyone can have their own Forex’s trading strategy, no matter conservative or exotic one. The positive result is what really matters.

Nowadays there are more than 200 Forex systems, therefore before trading the real currency using the Forex strategy chosen it is highly recommended to test and assess its efficiency. The efficiency indicators are the figures that show profit and loss that appear in trading process. In order to calculate them it is necessary to test the strategy applied to a present time or historical data, then move on to analyzing such trade indicators as profitability, resistance to market changes, a series of losses, maximum drawdown, etc., and then finally to draw the conclusions about the effectiveness of Forex strategy or Forex advisor.

As any other professional, any Forex trader should have all the instruments necessary for trading. The most pivotal one is a Forex Broker. It is a team that provides the market data in a real time and carrying out the instructions in the Forex market. Such company should be professional and introduce up-to-day quotes, following the orders quickly and accurately. A convenient deposit method and small commissions should also take place.

To choose the broker wisely is a half of the battle!




WHAT BROKER SHOULD A NOVICE CHOSE? IS IT REALLY POSSIBLE FOR A NOVICE TO MAKE MONEY ON FOREX?

First and foremost is the dealing center with a perfect reputation which is widely known among other traders. Dealing center should have a simple and user-friendly interface, as well as a wide selection of trading instruments. The best dealing centers are able to provide traders with a large variety of input-output methods of funds for a convenient trading. If you have decided to try yourself out on the Forex market, you should remember this is not just a game but a serious work that demands constant self-education and practice. Moreover, the discipline and emotion control is crucially important too. There should be no place for greediness or losing one’s nerve.

In conclusion it should be noted that it is necessary to invest money to work in Forex, as the operations performed basically on the currency exchange. Although investing money is always a risk, it can be minimized if the market and its rules are carefully studied first.