Information about Forex
Forex, or foreign exchange, is an international market in which countries trade values in another country’s currency for values their own, and vice versa. It should be noted, however, that by “trade,” we mean that the values are bought and sold. The foreign exchange market as a whole has no singular governing body, and instead operates 24-hours a day, worldwide. This is where forex differs from a traditional stock market; many, many countries are involved and the market involves millions and millions of people worldwide. There is no one to settle disputes, and no one to enforce the laws (assuming they existed); instead, there are agreements between the seller and the buyer. Not surprisingly, this system has proven itself to work time and time again.
Because the foreign exchange market is so competitive, traders have no choice but to be completely honest. They expect your honesty in return for theirs; no one has time for a fib. Every single trader is expected to keep up their end of the deal. While there is no international regulating panel, individual countries will often establish an institution to regulate their traders and brokers. In the United States, this organization is called the National Futures Association, or the NFA. The NFA is a self-proclaimed “watchdog of the commodities and futures industry in the United States,” ensuring that investors are protected from any and all possible fraudulent activities.
It is extremely difficult for any institution, broker, or investor to abuse the system of trade that has been established within the foreign exchange market. It is a thing of beauty, a well-oiled machine; the trillions of dollars that pass through and enter the market on a daily basis could never (statistically speaking) be controlled by a single institution. Many believe the forex market to be a “free and fair marketplace,” meaning that every investor has equal odds for success.
In many countries, employees are offered commission as an incentive for them to do their job well. In the foreign exchange market, things work a little differently; there are no commissions. Brokers make their money by facilitating the exchange, and making a profit on the difference between the buying value and the sale value. This is crucial to keep in mind if you are among those who are interested in entering the market.
There are many reasons why the forex market is so incredibly interesting and appealing. Those who are inexperienced should approach the market with caution, however those with experience stand to be extremely successful. You must be able to take responsibility for your own mistakes, as there is no “undo” button. If you are interested in entering the market but have not gained the confidence to dive in, consider contacting a registered broker; it could serve as a great learning opportunity and an engaging new hobby.
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