After listening to the country’s budget on October 4th, it is clear it’s time to change sides of the CASHFLOW quadrant. It’s time to become an investor. No better topic to drop today then Forex.
You may ask what Forex is; Forex is the exchange of one currency for another. For example when you go on a trip whether for business or pleasure you first need to get the currency of the country you are going to whether it be USD, Euro or Pounds. In order to do you must exchange ones currency to acquire the other (or a currency pair). In our case, TTD for USD if you going the USA or EC if you are going in the Caribbean.
So What is the Forex Market?
Basically, the Forex market is where banks, businesses, governments, investors and traders come to exchange and speculate on currencies. The Forex market is also referred to as the ‘Fx market’, ‘Currency market’, ‘Foreign exchange currency market’ or ‘Foreign currency market’, and it is the largest and most liquid market in the world with an average daily turnover of $3.98 trillion.
The Forex market is open 24 hours a day, 5 days a week with the most important world trading centres being located in London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris, and Sydney.
It should be noted that there is no central marketplace for the Forex market, trading is instead said to be conducted ‘over the counter’. It is not like stocks where there is a central marketplace with all orders processed like the Stock Exchange.
What is Forex Trading?
Forex trading as it relates to retail traders (like you and I) is the speculation on the price of one currency against another. For example, if you think the euro is going to rise against the USD, you can buy the EUR/USD currency pair low and then (hopefully) sell it at a higher price to make a profit. Of course, if you buy the Euro against the US Dollar (EUR/USD), and the US Dollar strengthens, you will then be in a losing position. So, it’s important to be aware of the risk involved in trading Forex, and not only the reward.
Next week a brief history of Forex…
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