Forex. For knowledgeable investors, or for the gunslinger-gambler type of investors, this is a familiar word that will probably bring either a smile or a scowl and not much in between the two. For everyone else Forex can sound like anything between a delivery service ripping off a more familiar name to a strange science fiction type of alien monster. Obviously it is neither: forex is referential to currency trading. Basically, when investors talk about forex, they are talking about trading one nation’s currency for another, and then selling down the line in the hope that changes in international markets will cause a profit.
These are also sometimes referred to as currency speculations. There are an increasing number of trading companies that are moving to online web pages that allow for currency speculation online. These companies provide an online trading platform for investors, or any individuals that want to speculate on the exchange rate between any two world currencies. The obvious hope is to make a profit when the value of the currency changes in the investor’s favor. The forex market is familiar to a lot of people, as it is considered the largest market in the world with daily reported volume of over 1.8 trillion.
The interesting thing about forex trading is that since it is an international trading scheme, a web site that is set up internationally can be open since 24/7 since somewhere in the world there is always a market open. Somewhere around the world, a financial center is open for business, and banks and other institutions exchange currencies, every hour of the day and night with generally only minor gaps on the weekend. Basically foreign exchange markets follow the sun around the world, giving traders the flexibility of determining their trading day.
While there are a lot of different ideas and strategies for how to best go about trading, the end goal is fairly simple. Buy a currency when it is low, and then sell it when it is high. For example, suppose one dollar is worth one hundred yen. $100 then equals 10,000 yen. Now wait for a year. Suppose the United States economy slows down, has some major warning signs, but Japan is doing great. Now one dollar does not equal 100 yen, but 75. Another way to look at this is that a year ago 100 yen equals $1, but now 75 yen equals $1. Now your 10,000 yen can be sold for $133.33. The investor just made 33% in one year! That is forex, and the promise of this type of one year turn around is what has investors from all walks of life playing the table in hope of making a Vegas type score.