Lesson #1

Chapter 1

The international currency market “Forex” of “FX” is a unique and highly differentiated entity within the world financial markets.

The Forex marketplace is larger than all world security markets combined and over three times larger than the entire United States securities marketplace. Foreign exchange currency trading transaction volume currently exceeds 2.4 trillion a day!

The Forex traders’ goal is to accumulate profits, from the purchase and sale of foreign currencies. The exchange rates of all the various currencies traded in the FX marketplace is continually changing – reacting to the dynamic referred to as supply and demand. This dynamic is strongly influenced by events in every day society, such as conditions in the local economy, political winds that may blow one way or another, as well as a multitude of other human and natural occurring events. As a result, prices of foreign currencies fluctuate (literally by the second), reflected in constantly changing exchange rates.

Forex, by its fundamental nature, has a heightened sensibility to a large number of varying factors, making it distinctly different than all other sectors of the world’s financial markets. For example, the FX marketplace provides complete accessibility to both individual and institutional traders. The FX marketplace immense dollar transaction volume, of $2.4 trillion daily, ensures liquidity of the traded currencies. Further differentiating the FX marketplace is that FX trading operates twenty-four hours a day, seven days a week. There is no trading floor to open or close – such as the NY Stock, American or NASDAQ exchanges. This enables traders to conduct transactions after normal hours, as well as during national holidays in their respective country. Finally, whether it is an individual or an institutional trader, complete access to all overseas markets is sustained on a 24 hour, 7 day a week basis.

The Forex trader makes money by utilizing the constant fluctuations in the marketplace, in accordance with the well-known principle of – “buy cheap and sell high”, to obtain his or her profit.