Particularities of the Forex Trading System

The term FOREX is an acronym for Foreign Exchange, and denotes the international exchange market for buying and selling currencies. The history of the FOREX trading system goes back to the 1970s, when free exchange rates and floating currencies were introduced, meaning that the price of one currency against the others is strictly determined by supply and demand.

The FOREX market has the largest liquidity a market could have, and it is impossible to manipulate, due to its lack of external controls. Both marginal traders and long-term traders can be found in this market, making it an interesting environment for a wide range of investors.

In the FOREX trading system, transactions take place all over the world by means of telecommunications, meaning there is no central FOREX exchange to handle all trading. Trading starts on Monday at 00:00 GMT and ends on Friday at 10:00 pm GMT. FOREX traders operate literally all over the world, buying and selling major currencies.

Margin trading is very common in the FOREX trading system, meaning that investors obtain a credit line and speculate on currency prices. By doing so they increase their potential for huge gains, although the same potential exists for losses. Marginal trading specifically refers to trading with borrowed capital. The fact that big positions in the market can be established without large amounts of actual money makes this market very appealing, as well as easy to enter into.

FOREX trading can seem particularly difficult for beginners, especially in their first months on the job. It is a stressful job, because the perspective of losing huge amounts of money that you do not possess can be overwhelming. Then there’s the actual time spent in front of the screen watching dozens of price fluctuations, in order to decide what your next move is going to be.

There are certain aspects that are specific to the FOREX trading system, and that must be familiar to all traders involved in these operations. This market is somewhat different from the other equity markets. For one, when it comes to buying and selling currency, it is important to note that all trades represent the purchase of a certain currency and the sale of another, simultaneously, because currencies are priced in pairs. This means that a successful operation is when the currency that was bought increased in value by comparison to the one that was sold.

Another feature of the FOREX trading system is the way in which the currencies are quoted, which every FOREX trader must be familiar with as well. Out of the two currencies in a pair, the first one is considered the base currency, while the second is referred to as the counter-currency or quote currency.

All these, and a lot more, are thoroughly presented and explained in a FOREX course. It is very important for traders on this market to start out with the advantage of having learned from the success of other traders. The authors of any FOREX course should be traders with considerable experience in this market. The most important skill that a FOREX course can teach a newcomer to this job is how to avoid beginner mistakes, which can be extremely costly.

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