This is an intro to the Foreign exchange market or Forex For Beginners. The currency exchange market has been called the closest thing to true market competition. This investment has of the most liquidity of any other investment because it is, in fact, currency.
At the heart of Forex Trading is the currency exchange rate. That is the most important piece of information in Forex For Beginners. The foreign exchange market or Forex market is the mechanism that sets currency rates in relation to each other. Then with that knowledge trading can be done based on speculation, as to what currencies will raise in value in comparison to the purchasers current currency.
This Forex For Beginners introduction centers around basic principles even though there are several related products that can make the currency market complicated in a hurry.
The Forex market began over time and was pretty much as we know it today by the mid 1970’s. The system is based on the Bretton Woods system of monetary management. This occurred as the countries of the world switched to a floating currency as opposed to a fixed currency as they had in the past. This Forex For Beginners information page won’t get into all of the rules that set the market up.
The major countries switched all around the same time.
Since then most countries that are not under some kind of economic sanction are participating in currency exchange. We won’t list all participating countries in this Forex For Beginners guide but here are the most traded currencies. The United States at 84.9% is by far the most traded and most trusted despite the drop in the credit rating of recent months . the Euro at 39.1% the Japanese yen at 19.% The British pound sterling at 12.9%. the Australian dollar at 7.6%.
Keep in mind that these are the most traded for many reasons, many of which have nothing to do with investment. Because they are the most traded the Rate of exchange of the larger countries will vary less than the rate of exchange of smaller countries. We want to avoid too many long winded explanations in these Forex For Beginners guidelines but suffice to say, the smaller countries generally offer more flexibility in currency rates and therefore more opportunity for a speculative investment.
This Forex For Beginners essay would be remiss not to mention that the economies of the world have become quite a bit more stressed than in past years. This is a worldwide phenomenon. The US and other world economies have been devalued and many people are running from traditional investments and going to secure retirement plans and gold. However bad the recession gets it is highly unlikely the world will stop using Forex. The Foreign Exchange now is involved in too many economic mechanisms to become unraveled now.
Keep in mind that at the heart of currencies investment is to make money of the fluctuation of rates if one currency is going down then it is inversely related to another currency that is going up. This author of Forex For Beginners advice is to invest in the one that is going up.