Foreign exchange (FOREX) is the arena where a nation's currency is exchanged for that of another. The foreign exchange market is the largest financial market in the world, with the equivalent of over $1.9 trillion changing hands daily: more than three times the aggregate amount of the US Equity and Treasury markets combined with other financial markets.
The foreign exchange market is the place where currencies are traded. Currencies are important to most people around the world, whether they realize it or not, because currencies need to be exchanged in order to conduct foreign trade and business.
Before trading Forex you need to set up an account with a Forex broker. What exactly is a broker? In simplest terms, a broker is an individual or a company that buys and sells orders according to the trader's decisions. Brokers earn money by charging a commission or a fee for their services. Deciding on a broker requires a little bit of research on your part, but the time spent will give you an insight into the services that are available and fees charged by various brokers.
When selecting a prospective Forex broker, find out with which regulatory agencies each dealer is registered. The Forex market is label as "unregulated" market, and it basically is.
In the United states a broker should be registered as a futures commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) and a NFA member. The CFTC and NFA is here to protect the public against fraud, manipulation, and abusive trade practices.
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