Forex Trading Training: 12 Interesting Facts about the Forex

Forex Trading Training: 12 Interesting Facts about the Forex
Trading Market
Gregory DeVictor

Forex is an abbreviated name for "foreign exchange." The Forex
trading market is an around-the-clock cash market where the
currencies of nations are bought and sold, typically via
brokers. For many years, the Forex market was dominated by large
institutions such as banks and brokerage firms. However, the
Forex market has experienced a major change over the past
several years, as a growing number of private investors and
traders just like you have started to actively participate and
trade. The purpose of this article is to reveal 12 interesting
facts about the Forex trading market.

1. What is a Forex trading system? According to Howard Abell,
"The [Forex] trading system gives the trader the ability to
control his or her emotional states rather than allowing them to
control him. A [Forex trading] system is a disciplined method
for organizing dynamic, ever-changing market phenomena."

2. Forex is the most liquid market in the world, thus making it
easy to trade most currencies.

3. Unlike equities or futures trading, you pay no commissions on
the Forex deals that you make.

4. According to the Wall Street Journal Europe, the most
commonly traded currencies on the Forex market are the U.S.
Dollar (USD), the Japanese Yen (JPY), the Euro (EUR), the
British Pound (GPB), the Canadian Dollar (CAD), the Australian
Dollar (AUD), and the Swiss Franc (CHF).

5. The most commonly traded currency pairs are the U.S. Dollar
and the Japanese Yen, the U.S. Dollar and the Euro, and the U.S.
Dollar and the Swiss Franc.

6. The U.S. Dollar is involved in nearly 90% of all Forex
transactions.

7. Ten financial institutions account for nearly 73% of the
total Forex trading market volume. The Top 10 most active
traders include Deutsche Bank (17.0%), UBS (12.5%), Citigroup
(7.5%), HSBC (6.4%), Barclays (5.9%), Merrill Lynch (5.7%), J.
P. Morgan Chase (5.3%), Goldman Sachs (4.4%), ABN AMRO (4.2%),
and Morgan Stanley (3.9%).

8. The five major Forex trading centers are London, New York,
Tokyo, Sydney, and Frankfurt.

9. The three major Forex trading countries are the United
Kingdom (32.4%), the United States (18.2%), and Japan (7.6%).

10. Currency market players typically use "Forex analysis" as a
means of predicting currency price movements. Forex analysis is
divided into two types: fundamental and technical. A fundamental
analysis uses economic and political factors, such as
unemployment rates, interest rates, or inflation, as a means of
predicting currency movements. A technical analysis uses
reliable historical data as a means of forecasting these
movements. The technical analyst believes that history repeats
itself over and over again.

11. Some Forex traders depend on fundamental analysis while
others depend on technical analysis. However, many successful
Forex traders use a combination of both strategies. The
important point to remember here is that no one strategy or
combination of strategies is 100% certain.

12. Margin is referred to as the collateral needed to facilitate
the Forex deal. Usually, this is a very small portion of the
entire deal, say 1% or 1:100. Please note that margin is a
"double-edged sword." Without the proper use of risk management
tools (for example, the stop-loss option), you can experience
substantial losses as well as gains. We suggest that you take
complete advantage of stop-loss and take-profit options in your
Forex trading.

Trading Forex on margin carries a high level of risk, and may
not be suitable for all investors. The high degree of leverage
can work against you as well as for you. Before deciding to
invest in foreign exchange you should carefully consider your
investment objectives, level of experience, and risk appetite.