A Beginner's Guide to FOREX

[Kathy Garner]

FOREX is the abbreviation for the Foreign Exchange market. FOREX is
basically an international exchange market where currencies from all
over the world are bought and sold for profit. The market today began
in the 1970's. FOREX is a very unique market because it is not based
in any particular place, and it also has very few qualifications for
investing. FOREX is also free of external controls, and the investors
(participants in the market) largely determine how much a currency is
worth based on demand. Almost anyone can invest in FOREX, and there
are strategies for investors who want to have long-term gains, and
strategies for investors who desire short-term gains. The vast array
of investors makes FOREX quite unique in the financial community.
The Workings of FOREX
FOREX is not centered at one place like the NYSE. The specific hours
for FOREX trade are 24 hours a day from Sunday afternoon to Friday
afternoon. FOREX transactions can take place at almost any time,
anywhere, all over the world. There are FOREX dealers in almost all of
the time zones, and it is simple to find them. Many dealers can be
found online. All an investor does is decide what currency he or she
wants to purchase, contact the dealer, and then makes the purchase.
Many investors purchase using a credit line (money they do not have).
This is called marginal trading.
What is Marginal Trading?
Marginal trading is a term used for trading with borrowed capital.
FOREX investments can be made without actually having the money. All
an investor needs to do is borrow the money for a certain currency.
The investor wants to choose a currency that will increase in value
quite rapidly. Once the currency increases, the investor pays back the
money he or she borrowed and makes sheer profit. This is a high-risk
investment, but the rewards are great (as with most high risk
investments).
Two Types of FOREX Analytics
FOREX traders often have to analyze the market. Like all investments,
FOREX involves a certain amount of calculated risk. Two ways to
calculate these risks are though Technical Analysis and Fundamental
Analysis.
Technical Analysis is based on the idea that trends through history
will continue. A FOREX investor will notice that a certain currency is
very strong and seems to be rising at a normal rate. The same investor
will also suppose that the currency will not decline in value, and
will continue to rise, as it has done in the past. The investor then
purchases a large amount of that currency and expects to make a
profit. This investment entails a large assumption but is relatively
safe.
Fundamental Analysis is an analysis of an entire countries situation.
Investors utilizing this technique look at the situation of the
country in which the currency finds its base. Factors such as the
countries economic status, political status, and global status are
taken into account. For example, a Fundamental Analysis investor would
not invest in currency from a country that just overthrew its leader
and is in political shambles. Although this investment seems logical,
it does not take into account one of the fundamental elements of FOREX
trading. FOREX currency values are largely determined by the
investors. That being said, Fundamental Analysis assumes that other
FOREX traders will view a countries situation in the same way and
respond accordingly.
Benefits of FOREX
FOREX can be very beneficial to a variety of people. FOREX trading can
gain investors a large amount of money either over a long period of
time, or in a short period of time. Investors who choose to invest in
FOREX are generally well informed about the market and understand the
current situations in many countries of the world. Investing in FOREX
is simple and highly recommended for anyone who wants to enjoy profits
from top-notch investments.

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