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Learn About Forex Trading - Betting on the Markets

With such a huge daily volume, you can expect that Forex is a market where there is not a lot of difficulty getting in and out of positions. You would be wrong if you thought that individuals sell currency pairs to each other; it is not that kind of "exchange." Rather, transactions come through brokers, who make a commission on what they do.

And activity takes place all over the world, with much of it centering around major financial centers ("anchors" if you will) like Hong Kong, New York, London, Tokyo, Paris, Sydney, Frankfurt and Zurich. For someone with some smarts, it could be a worthwhile experience to learn about Forex trading.

The Bretton Woods System, which was used starting in 1944 to establish monetary order among the different independent nations of the world, was based on U.S. currency backed by gold, because the U.S. Dollar was used as the primary reserve currency. When the U.S. government decided in 1971 that dollars could no longer be convertible to gold, the Bretton Woods System came to a very abrupt halt, and thus many fixed currencies became floating currencies.

This spawned Forex, which started to be traded electronically in the 1990's.

There is no central location or marketplace for Forex. But that is its strength and its intention. What happens as a result is that values of the various currencies are established, as they relate to each other.

It is always open during the week; that's 24 hours a day for five days, from 20:15 GMT on Sunday until 22:00 GMT Friday. That obviously contributes to the volume level, and it is also what makes it so readily accessible for the small retail trader.

It is probably no surprise that the U.S. Dollar (USD) is the most heavily traded. Next in line is the Euro, followed by the Japanese Yen, British Pound and Australian Dollar,

The term "pair" is commonly used in association with currency, because the various currencies are traded against each other; hence they are "paired." So it is always a matter of what a currency is worth compared to one unit of the other currency. Economic factors, political atmosphere and the activity of the public all factor into what the exchange rate is going to be for any one particular currency.

When playing the Forex market, there has to be a little bit of luck in order to succeed, but what one must be more concerned with is having as much information about the financial world as possible, because this is no ordinary gamble. However, the reason many people get into it is that for the person who is knowledgeable, disciplined and very realistic, this can yield some fantastic results.

Of course, one must be realistic about risks too. This is no "automatic." Even though it is relatively inexpensive to enter the market, there is the possibility that all money could be lost on any one trade, so a bankroll that can withstand that turbulence and then come out on the other end ready to take advantage of an opportunity is certainly preferred.