What Is forex

So you want to know what is forex?  The term forex is a commonly used acronym for foreign exchange and is used to typically describe trading within the foreign exchange markets by both investors and speculators.   When one looks at the forex market you will see a decentralized market that deduces the relative value of numerous currencies.

The forex markets and pricing are constantly changing.  Currencies within the forex market trade in an open market which is similar to that of stocks and bonds.  Typically, a currencies value will change based on supply and demand.   When the supply of a particular currency increases the value of that currency can fall.  Conversely, if the demand for the same currency increases, this can increase the value of that currency. 

The forex market does not consist of a centralized exchange where buying and selling take place on a day to day basis.  The transactions that take place within the forex market are driven by numerous participants in various locations.  In addition, it is rare that any two currencies will be similar to another in price and that the same currencies maintain the same value for more than a fraction of the time.

As discussed, the supply and demand of forex plays a key role in determining how a forex trader formulates their strategy to make money.  The reaction of forex traders, plays a large role on what influences the exchange rates.  Similar to the stock markets forex trading has a tendency to vacillate during periods of greed as well as periods of fear.  The number of variables associated to forex trading is enormous and because of the number of participants, it is very difficult to trade successfully on a consistent basis.

To increase the number of successful trades, forex traders rely on sophisticated trading platforms which allow them to increase the changes of hitting it big.  In addition, successful traders use numerous charting techniques along with detailed strategies to gain an upper hand on the markets.

The trading platforms on the market today offer so many different features that the forex trader has the luxury of choosing his/her platform based on their trading strategy.  Before the forex trader goes all out on one specific platform they should be certain that the platform offers features such as; ease of trading execution, web based/mobile, desktop functionality and the look and feel of the platform.   One of the most important aspects of choosing a specific forex trading platform is how strong the customer service support of the company.  In addition, it is extremely important that the trading platform that the forex trader utilizes has an account service manager that can be contacted if questions arise.  A forex trading platform along with the company that you utilize should be able to communicate via either telephone, e-mail or an on-line chat portal.

Another aspect of forex trading is security which is associated to the system/platform which the trader is utilizing.  The forex trader needs to be certain that his/her trades are protected consistently from outside sources.

So, forex trading can be both complicated as well as exciting.  The disciplined forex trader will have a defined trading strategy, understand the markets and will utilize the best trading platforms to succeed at his/her craft.