Why FOREX?

What brought you to the currency market? Because the currency market is the best darn market to trade! Ok, i realize that is not a very scientific statement but it is true. Let me elaborate.

This particular market has many favorable features over the other more traditional markets like the stock market. Not only is the foreign exchange the largest financial market on the face of the earth with over $3 trillion changing hands every single day, but it's also the most liquid. In other words, getting in and out of positions is almost instantaneous and you basically never run the risk of being stuck in a trade that you cannot liquidate. For every buyer there is always a seller, and vice-versa.

With this kind of size and liquidity, and the fact that the market operates 24/7, 6 days a week, no single event can impact the market for prolonged periods of time. This, by definition, is a good environment for more steady, trend-like (unidirectional) moves thus adding an element of predictability to this market, which also lends itself well to certain types of analyses (technical analysis).

The foreign exchange market is also unregulated. There is no central office of operations and no formal control. Most newbies might consider this to be a scary prospect but in reality it works out much better. Centralized markets (like stock and futures markets) tend to monopolize the market place. Decentralized markets (like forex), still have a hierarchical, credit approved, structure among the largest banks (otherwise known as the interbank market) and the various market makers (brokers). It all comes together to form a seamless operation.

Now i realize the above paragraph might be a bit confusing but the main point you should basically take from it is that the forex is decentralized in nature and runs just fine. If you want further information on its structure, check this out: http://en.wikipedia.org/wiki/Foreign_exchange_market
http://www.investopedia.com/articles/forex/06/interbank.asp

The most important feature of the FOREX is the high leverage it allows you to employ. We'll discuss how leverage can benefit you and hurt you in later posts and how you, as a newbie should approach leverage, but suffice it to say that this capability allows many people to make huge profits with very little capital. Alas, this is probably the single most influential factor bringing people to the currency markets.