Currency is
the ultimate commodity. A foreign currency trade takes place every
time a company or government buys or sells products or services
in a foreign country; one currency is exchanged for another. A large
number of individuals and organizations also do currency trading
for speculative purposes. Consequently, it is no surprise that the
foreign currency exchange market, also known as "forex"
or "fx" market, is the largest financial market in the
world. The currency trading market is much bigger (trades more volume)
than all the world's stock markets put together. No other financial
market even comes close to its sheer size and global reach.
To get an idea
of the unbelievable size of the currency trading market, we have
to look only at the growth and daily volume in foreign exchange
activity. From 1997 to the end of 2000, daily currency trading volume
surged from 5 billion to 1.5 trillion dollars. The currency market
continues to grow at a phenomenal rate.
In the past,
only corporations and wealthy individuals could trade currencies
in the currency market through the use of bank proprietary trading
systems, which required at least US$1 million to open a trading
account. That was before the Internet came along. Now, the market
is totally changing. Thanks to modern advancements in online trading
technology, investors with only a few thousand dollars can now have
24-hour access to the online currency trading market.
For day traders
and swing traders, the currency market provides an alternative to
stock market and futures trading. A trader only has a few major
currencies to trade (the Dollar, Yen, British Pound, Swiss Franc,
and the Euro are the most popular), whereas he is faced with tens
of thousands of stocks to choose from. Currency trading also provides
greater leverage than stocks and futures, and the minimum investment
required to open a currency trading account is much lower (increasing leverage increases risk). All of
these advantages compounded with the ability to choose flexible
trading hours (currency trading goes on around the clock), has resulted
in many stock traders deserting the stock market to day trade currencies.
If you want to try out currency trading, click on the link below:
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