FOREX – A Closer Look
If you’re thinking of moving beyond basic investing in various companies listed on the NASDAQ or New York Stock Exchange, then one option you may want to consider is FOREX, or the Foreign Exchange Market. Also called FX or just the currency market, FOREX is essentially a financial market used to trade currencies on a worldwide scale. It’s vital for a wide range of different applications including global business endeavors like trading goods and commodities since it helps to facilitate the application of exchange rates throughout the world. A company in America can import goods from foreign countries and pay them in their own form of currency.
There are numerous things that set FOREX apart from virtually any other market on the planet. The most obvious is the fact that it is up and running twenty four hours a day except over weekends. It also represents the largest asset class in the world and can utilize various forms of leverage to directly influence profit loss or gain. Also, numerous different factors help contribute to its exchange rates. All of these factors have helped it become known as the market that comes closest to perfect competition. Daily turnover is over 3.8 trillion dollars, a figure that is absolutely astounding.
As for just what countries rely the most on FOREX, it shouldn’t be a surprise that America tops the list with over eighty four percent of the daily share being comprised of the dollar. The Euro follows that with just under forty percent, followed by the Yen. On the FOREX, currencies themselves can actually be traded as well and many currency investors rely on the market to make their investments. However, unlike localized markets, this market is more influenced by a wide array of different factors, and careful research is needed to ensure that your moves are smart.
The economic factors occurring in individual countries is a major factor in most currency rates and in transactions made on the FOREX, but that isn’t all. Political issues can also have a profound impact, and unrest or turmoil as well as transition to a new governing body can all slightly or drastically affect exchange rates. Learning more about FOREX is a good idea, especially if you’re involved with international trading and investing. But it can be a very complicated and volatile market, and due diligence needs to be utilized whenever you make any moves within its confines.