Why Trade Forex

Retail Off Exchange Foreign Currency Market (Forex) is trading where the commodity traded, is currency. The  return for the trader and investor is rather the relative exchange value of one currency against another currency.

More and more well informed traders and investors are diversifying their traditional investment portfolios like stocks, bonds & commodities with foreign currency because of the following reasons:

• Market Liquidity - Because of the size of the Foreign Exchange Market, investments are extremely liquid.  International banks are continuously providing bid and ask offers and the high number of transactions each day means there is always a buyer or a seller for any currency.
• Accessibility – The market is open 24 hours a day, 5 days a week. The market opens Monday morning Australian time and closes Friday afternoon New York time. Trades can be done on the Internet from your home or office.
• Open Market – Currency fluctuations are usually caused by changes in national economies.  News about these changes is accessible to everyone at the same time – there can be no 'insider trading' in Forex.
• No commission – Brokers earn money by setting a 'spread' – the difference between what a currency can be bought at and what it can be sold at.

How does the Forex Market work?

Currencies are always traded in pairs – the US dollar against the Japanese yen, or the English pound against the euro.  Every transaction involves selling one currency and buying another, so if an investor believes the euro will gain against the dollar, he will sell dollars and buy euros.

The potential for profit exists due to the large volumes traded daily between currencies. Even small changes can result in substantial profits or losses. At the same time, tools exist to minimize potential losses for the individual investor.

There are also many software facilities available to protect both the broker and the trader or investor to minimize their risk as much as possible.

In Volatile Market Conditions, substantial losses may occur.