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Forex Trading Explained

Foreign Exchange trading or Forex for short is certainly not a new concept. Forex as we know it today has roots back in the late nineteen century, or the year 1875 to be precise. This is when the gold standard monetary system was first introduced the same standard that is still in use in most of the world today. The gold standard simply means that the government, or the central bank of a country guarantees that the currency of said country can be exchanged for a certain amount of gold in any given moment. Once enough countries adopted the gold standard monetary system, trading the currencies became possible, and thus, Forex was born.

Forex trading is still very popular, as well as lucrative today, more than 100 years later. It’s actually one of the biggest forms of trading in the global market, at least judging by the value of transactions that get carried out every single day. Forex works on a simple principle by buying and selling various currencies. For instance, you can buy US dollars using Euro, or sell them to obtain British pounds.

One of the reasons Forex is still going so strong today is it’s location independence. You can access Forex trading networks from virtually anywhere in the world, using just your computer and an internet connection or even your telephone. Trading takes place twenty four hours per day, from Monday to Friday, so you can be an active Forex trader and still keep your day job. And lastly, it’s much easier to get into Forex than in some other forms of trading, like stock or commodities trading. Forex presents much less initial difficulties, since the number of variables is much lower. IN a way, Forex is much like chess very easy to learn, but not that easy to master.

All of the above reasons make Forex trading popular with a very wide and diverse range of companies and individuals from all parts of the globe, including all the usual suspects. Banks, investment funds and large financial institutions are involved in Forex trading market, as well as governments, currency speculators, international conglomerates and corporations, and even day traders, tourists and travelers use Forex.

The most commonly traded currencies on Forex trading market the big five, as it’s often called are the US dollar, Euro, British pound, Japanese Jen, and lastly, the Australian dollar. Obviously, a different currency might be bought or sold in large quantities in any given day, depending on the market trends, changes and fluctuations, which can change both often and with very little warning. The rates on Forex markets are determined by a number of factors, including changes in the economic conditions and policies, geopolitical events, and more and more, by robot trading. Robot trading is a relatively new phenomenon that is becoming increasingly popular in the world of Forex trading. Essentially, it is a piece of computer software that suggests transactions based on a number of factors. Robot trading has reduced the need for constant monitoring, and is already having a big effect on the daily rate changes on Forex trading market