Forex Market and Forex Signals

Forex (FOReign EXchange) is the worldwide exchange market system where currencies are bought and sold. The forex market began its life in the 1970’s, when free market exchange rates and international currencies were first floated. The prices in the forex market is purely driven by supply and demand for one currency or the other. The forex market itself is the biggest and most liquid trading markets in the world. The volume of trade can reach $2 trillion daily. The market is mostly free from external controls and because of its sheer size, cannot be overtly manipulated. The volume and the number of market participants gives the currency markets its liquidity – unlike certain stocks that are susceptible to gapping and slippage, forex traders are able to open and close their positions in an instant because there are always a buyer and a seller in the market.
The currency markets have a number of different participants with different motivations for forex trading. Hedge fund managers as well as large multinational corporations jump into the forex market to hedge their positions in certain currencies. Retail (public) investors join the market, often using a form of leverage through a forex broker utilise forex trading to make profits from the small daily fluctuations in individual currency prices.
Forex Trading for Retail Investors
Retail investors are the general public who aren’t affiliated with a bank or a brokerage firm. Since forex transactions are not centralized in one exchange, unlike stock exchanges like the NYSE and the ASX, they are taken place through an “inter-bank market”. The forex market opens when New Zealand wakes up for business on Monday and closes then the New Yorkers decide to knock off. Which is around 2200-2300GMT Sunday to about 2200GMT on Friday. If a retail trader would like to jump into the forex markets they can choose a forex dealer, deposit some money to trade through a credit card, cash or check (cheque) and trade the forex markets. These forex dealers who facilitate the retail clients often give some leverage, sometimes to the order of 400:1, but most dealers give 100:1 leverage because it is safer. This form of leverage trading is called trading with margin or marginal trading.
Forex Margin Trading
Margin trading is the term used to describe trading with borrowed capital to allow you to leverage your trade. A 100:1 leverage allows you to deposit only one percent of the overall investment in the trade, which gives you exposure to the overall currency movement. Through margin trading, the retail trader is able to trade large amounts of cash with a small amount of starting capital. So with a 100:1 leverage, you can deposit $1,000 (one thousand dollars) and have exposure to $100,000 or one standard lot.
What’s a “lot”? There are two types of “lots” in forex trading. You can either trade a standard lot or a mini-lot. A standard lot refers to $100,000 and a mini-lot is a tenth of that which is $10,000. When you trade forex, you decide how many lots or mini-lots you would like to trade. The more lots you decide to trade with, the more exposure you have to the currency price fluctuation.
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