Forex for Dummies!

I am willing to learn something about the Forex market, so I started to search the web, to find some useful content. On my searches I’ve found a Forex broker named FX Universal (google it to find); like many brokers, they offer a basic introduction on Forex market to newbies like me. I received the sample lesson by e-mail (need to sign up to receive it), and I will share it here (because some people just don’t want to give personal info only to get this). Because it is too long (14 printed pages) I will split it and post little by little. This one is the first part, enjoy.

Introduction: What is the FOREX market?

The Interbank Market (Forex or FX) is the largest, most liquid and fastest growing financial market today. The FOREX functions like any other market: Buyers and sellers of a commodity meet and trade. In FX, as in any market, a currency whose demand exceeds supply will see the value go up, and vice versa. Some say it is the “purest” or “truest” market in existence, due to that every factor influencing peoples lives in terms of economics, technology and geography is involved.

- FOREX is a vibrant, 24-hour market comprised of diverse group of participants from every corner of the earth. - FX trading is the mechanism that values all currencies, and is the most essential component of global commerce. - An exchange rate is the price of one currency in terms of another, also known as a pair or a cross. - The FOREX is one of the most versatile and dynamic markets traded.

Historically, the oldest function of the FOREX was the facilitation of international trade. Since countries have different currencies, the FOREX market must exist for international partners to trade goods and services or to travel abroad. However, the present function of the FOREX market is speculation.

The course material will afford you an intimate knowledge of the dollar and other major currencies. This awareness will offer a new perspective on trading the FX market. A new perspective that will give students a fresh outlook so they can feel the confidence that is conducive to profitability in FX trading.

Major Units

The U.S. Dollar

The U.S. dollar (USD) is the world’s benchmark currency. Most currencies are quoted in terms of U.S. dollar and many currencies are directly pegged to it. The ˜greenback” became the leading currency toward the end of World War II. The major currencies traded against the U.S. Dollar are the Euro, Japanese Yen, British Pound, and Swiss Franc.

The Euro

The Euro (EUR) replaced the German mark and became the second most common currency after its initial release in December of 1999. The Euro has a strong international presence stemming from members of the European Monetary Union; however, it is exposed to a wide variety of economic and political factors deriving from the expansive number of members of the Euro Zone. This is vastly different from the responsibilities another currency usually encounters from a single economy. Nevertheless, many major countries like China, Japan, and Russia maintain large reserves in what some speculate will be the benchmark someday.

This is only an introduction, to you (and me) know what in the hell Forex is. As the lesson stated, it’s a market that deal with currencies exchanges. Some people say that is the riskier market in the world (because they don’t know the HYIPS, just kidding…) and even experienced investors may lose money in there. If you want fast profits, and don’t want to put your brain to work, this is not a place to you.
Next part of lesson: Central Banks & Commercial and Investment Banks.

Enjoy the information,
Yaacov Peretz.