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Forex Trading| Article #226 : FOREX TRADING INTRO

I have a confession to make. This is one of the biggest rushes I’ve had next to investing in the stock market. I am talking about Forex trading.  I don’t do a lot of it because I know it’s risky, but whenever I have a few extra bucks I can spare (okay, more than a few) I give this a ride. Word of warning: If you don’t know what you’re doing, Forex trading can literally eat you alive. So if you’re uneducated in this area and can’t afford to lose any money, I seriously suggest staying far away. Having said that, what follows is just a very brief intro into what Forex trading is. Hope you enjoy it.

Forex trading, as a definition, is pretty simple to define. It’s merely the trading of all the world’s currencies. In other words, trading US dollars for Japanese yen which by the way was established as the official currency of Japan in 1871. But that’s not important to this discussion, though you do learn a lot when you get into Forex trading.

Okay, but if that’s all Forex trading is, then why is it so hard? Isn’t it just a matter of knowing what the exchanges rates are and figuring out if they are going to go up or down? Well, in theory, that’s all there is to it. But the tricky part is figuring out what those trends are. But we’re jumping ahead of ourselves. Told you this gets me all juiced up. Okay, let’s rewind a bit.

Forex trading is much different from trading on the stock market. Why? Because stock market trading is controlled through a central location known as the New York Stock Exchange, or more commonly referred to as Wall Street. Forex trading, on the other hand, is conducted on the interbank market.  This market is thought of more as an over the counter market. The trading itself takes place between the two entities who are making the trade, where with wall street and stocks, when you sell or buy your stock, you have no idea who’s the buyer or seller. With Forex, you know exactly who you’re dealing with.

There are Forex centers all over the world. The main centers are located in Sydney, Tokyo, London, Frankfurt and New York. Because of the different time zones, unlike Wall Street which closes every afternoon, the Forex market is open 24 hours a day, which means that trading can take place at even 2 in the morning your time.

In our next installment on Forex trading, we’ll go into some of the specifics of how Forex trading actually goes down, what the main currencies are that get traded and some common Forex trading terms.

See you next time.

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