Forex Trading

Written by Patricia Tunstall
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When the United States went off the gold standard in 1971, national currencies became increasingly controlled by supply and demand. Volume of trading expanded, and volatility escalated. With the flourishing of the Internet and technology, capital flowed more freely from country to country, and continent to continent. Today, time zones are irrelevant. Forex trading follows the sun.

Known as the Interbank, the trading and exchange marketplace is over-the-counter. Currency trading is done electronically, by telephone, computer, or Reuters. No such entity as a stock exchange exists in the world of spot forex trading. With over $1.5 trillion traded daily, foreign currency trading is the world's largest financial forum.

High Liquidity

Buying and selling foreign currencies electronically in forex trading results in high liquidity. The marketplace is open 24 hours a day, from Sunday evening to Friday afternoon. With constant liquidity, the forex trader can respond instantly to any event in any country in the world. All the more reason for only very experienced investors to participate in the forex market, namely, those who understand and can interpret trading signals. Margined currency trading is among the most perilous of financial transactions. Only seasoned, knowing professionals should participate.

Successful, that is profitable, currency trading demands careful attention to economic conditions and political decisions in countries worldwide. These matters affect the value of each national currency relative to other national currencies. Confidence in the country's policies and decisions is reflected in the buying and selling of its currency. A country's stability is a strong factor in the flow of foreign investment into its economy.

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