To know how was created the FOREX and others, do not interest the investor. What he wants to know is: it is possible to make money on the FOREX?
The answer is YES.
YES, if you don’t do anything. Not like "Toto makes Trading". I invite you to consult the advices to deal with the FOREX in order not to make as the majority of the particular who come to the Forex believing they know everything, being sure to make money, and finally to get it wrong. (Stage by which I passed of course, otherwise I will not say it)
So I will introduce you the FOREX…
The Forex, or Foreign exchange market, is the market where we are dealing with currency pairs. Example: EURO against the DOLLAR, or more usually known as EUR/USD. So, the value of one euro in dollar is priced.
In our example, the EURO is the basic currency, the DOLLAR is the currency which makes you earn money or not in your trades. To sum up, whatever you do on EUR/USD parity, sell or buy, you win or lose dollars. When you close your position, the profit or loss is converted into basic currency of your account at the market price.
The parities on the Forex evolve according to the economic news of the countries involved in parity. For the EUR/USD it will thus be necessary to take into consideration all the economic news of the Euro area, as well as the United States. Each economic news is forecast, and news better than its forecast generally makes increase the currency concerned. Thus if good news on EURO is announced, EUR/USD parity will appreciate and if USD good news comes out, EUR/USD will depreciated.
However, keep in mind that good news EURO may depreciate the EUR / USD, in case of a news widely anticipated (most often a change in the rate of central banks), and also, a USD news can push the dollar to rise more, because even better.
The Forex is a market that suits perfectly to technical analysis. Indeed, when no news comes out, the market will most likely follow his trend (this is why the FOREX is also known as market trend), forming very often beautiful charts figures. The figure most found on the FOREX is the channel (bullish or bearish), because there is mostly a trend, marked by corrections.
The Forex market is very liquid. The daily volume now exceeds 2,000 billion dollars. There is no problem of compensation (besides since your broker ensures you this). The volume of trade is increasing day by day, because today, it is very easy to handle on the FOREX via brokers and Internet trading platform. And so much more because all brokers offer to their customers a leverage to deal with.
The Forex is not a really a volatile market. The average daily volatility of parity is about 1.5%. The Forex is made volatile by the leverage. Indeed, if we take the example of an individual investing 10,000 Euros with leverage up to 500, it can trade with 5 000 000 Euros on the Forex. Such a position on the EUR / USD will generate variations on its balance of plus or minus 500 USD per pip. So with a level of EUR / USD at 1.4000, a simple variation of 28 pips in the wrong side will make him lose everything on his account. (Conversely, in 28 pips, it doubles its capital ...)
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