You may have bought and sold stocks before, but have you ever bought and sold currencies? Currency trading has been going on for thousands of years, and it was the first market that countries, traders, and merchants used to help the open market work. The Forex, which is short for "The Foreign Currency Exchange Market," is a market where people trade national currencies. People, businesses, banks, governments, and even whole countries can use the Forex Market to take advantage of currency changes on the world market and make money by guessing which way one currency will move against another. Currency pairs are used to trade currencies.
Investing in stocks:
One of the more traditional ways to make money from an investment is through the stock market. People often say that investing in the stock market can make more money than investing in almost any other market. Even though you can make double-digit profits on the stock market and it usually gives you a better return than CDs or bonds, it is not always the easiest market to invest in. When you want to invest, you have tens of thousands of companies to choose from. This can be very overwhelming. Even if you stick to mutual funds or index funds, you can still make small gains in the double digits. It is still hard to find a system that can make more than 10 to 15 percent a year. To say the least, the stock market can be hard to understand. You have to do a lot of research, and you never know when a company will decide to go bankrupt or shut down. People usually lose money when they buy penny stocks. Large cap stocks are definitely better, but everyone knows that when a bad CEO gets in trouble, the company's stock goes down. When you try to make 20–30% gains in a short amount of time by trading individual stocks, you face a lot of risk and uncertainty.
The Currency Market:
Compared to the stock market, the Forex Market is a lot easier and less wild. But since there aren't as many TV and radio shows about Forex or FX Trading as there are about the stock market, you may need to learn more on your own. Since the Forex Market is an over-the-counter (OTC) market, it has no central trading floor and is open all over the world. If it were a market with one main trading floor, it wouldn't be able to be open for traders 24 hours a day. The Forex Market is open to everyone, but no one has to use it. It is open 24 hours a day, five days a week.
Currency pairs, which are two currencies that are traded in relation to each other, are used in Forex trading. Some currency pairs are more common than others, so you don't have to learn all of them, even though there aren't that many. The best way to trade on the Forex Markets is to make a plan and stick to it. When you know a currency pair well and your research leads you to a position that you think will make you money, you can work that position all day and night if you want to. This gives you the chance to make much more money than you could on the stock market. If you like to do your own research and not just do what everyone else does, the Forex Market could be a good way to invest.
