In the Forex industry, simply put, one currency is traded for another. Forex is the acronym for foreign exchange and it is one of the largest markets in the world. Some of the participants who exchange currency are seeking to exchange foreign currency for their own. It is usually a multinational company who sell services or products in other parts of the world.
The larger part of the Forex market are currency traders who are speculating on the currency movement, much like traders speculate on the movement on the stock prices. Currency traders often try to take advantage of the fluctuation in the currency market no matter how small the change may be.
When it comes to the Forex market, there is not always a lot of inside information. The fluctuation of the exchange market is usually due to the political and economic environment throughout the world. Currencies that are strong will usually fare well through any political and economic upheaval while the weaker currencies may falter. The goal of the Forex trade is to profit from choosing which direction the price will take, either up or down.
The Forex market is open 24 hours a day beginning Sunday and ending on Friday. The market operates worldwide, usually through banks and companies and sometimes individual investors. The currency market is in constant flux and will sometimes change while setting up a trade. Because of the constant state of flux, traders have the ability to trade multiple options and maximize profits.
With the market being open 24 hours a day, traders have the ability to jump into the market at any time and take a trading position. The trader can choose a trade expiration that lasts anywhere from a few minutes to as long as a month.
Forex is a product that can be leveraged. That means the trader just has to deposit a small portion of the full value of the investment in order to place the trade. The Forex profit or loss has the potential to be larger than traditional trading. The larger profit or loss is possible because Forex is not tightly regulated like stock trading and are not bound by the same margin limits.
Canada has less stringent Forex trading regulations than most other countries and that makes it very attractive for brokers to establish Forex trading as an independent trading option or as part of a portfolio of trading options.