The world of trading and investment can be as frustrating as it can
be rewarding! And Forex (Foreign Exchange) is no exception — often
described as risky, profitable and complicated.
Forex is the largest trading market in the world.
Forex is the worldwide market for buying and selling
currencies. These markets were developed to cater for the supply and
demand of different currencies by governments, companies and
individuals — for international trade and assisting importers and
Therefore those who trade in this market include consumers, businesses, investors, speculators and the banking industry.
Different countries use different currencies — which vary in
their values against each other. Forex trading invovles the buying and
selling of two currencies — trading pairs — you are selling one and
buying another eg you may use the US dollar to purchase British pounds
— if the supply of the pound lessens — it will cost more dollars to buy
pounds — the Forex trader hopes to sell their pounds at a higher price
than the purchase price.
A speculator in Forex is someone who accepts the possibility
of adverse exchange-rate movements in the hope of making a profit from
favourable movements in currency.
As a speculator you should always start trading with a small
amount and have a trading system — which tells you when to get in and
out of the market. It is a favourite option for currency traders as you
can trade the Forex market 24 hours per day and the transaction costs
This market — because of its sheer size — is hard to be
manipulated — which stocks can be — it is more likely to be influenced
by global news or events. Hence, the opportunity for 'insider trading'
However — beware -Forex brokers estimate that 90% of traders
lose their money; 5% break even and only 5% achieve profitable results!