Forex is bigger than all the stock markets, all the commodity markets AND the entire Treasury markets – put together!
Forex is a monster. It can make you a staggering fortune. It can also put you in the poor house. You have to know what you’re doing and know the simple secrets to understanding this incredible trading opportunity.
Forex Is Decentralized
The relative values of the world’s currencies are all set in real-time at various locations across the globe. It trades on what is known as the “interbank forex market.”Whereas the New York Stock Exchange, the NASDAQ, and all other equity markets of the world are centralized – that is, the stocks trade at a central location (whether that location is physical, like the original NYSE, or “virtual,” like the NASDAQ always was from day one) – the global forex market has no one place that it trades.
The interbank forex market is a world-wide computer network. It connects market participants – from the largest mega-banks in the world, to the small little guy sitting at home in front of his PC trading yen, pound and euros through an internet forex brokerl
Forex goes ’round the clock. 24/5 (it’s closed only on weekends.) Sydney, Australia marks the official beginning to the forex trading day – followed by Tokyo, London and finally New York City.
At any given moment, there are traders taking sides, speculating that a given currency will either strengthen or weaken against another. This ’round-the-clock trading causes the global currency market to be absolutely the most liquid market on the planet – bar none.
Whereas in times past, the only ones who could participate in this potentially staggeringly profitable market were the big banks and hedge funds, nowadays it’s possible for Joe Sixpack to try his hand at forex trading. The internet has made it possible. Many indie forex traders use automated forex trading strategies and find that works well for them, while others find it just helps them lose money more efficiently. Caveat emptor, as they say. Buyer beware.
This can be a double-edged sword, though. One individual retail trader can be making a small fortune (or large one, depending on his skill and/or luck) and another small-fry trader can be losing his shirt. You have to be very careful trading forex, or you risk getting wiped out.