You don't have to be a daily trader to take advantage of the forex market - every time you travel overseas and exchange your money into a foreign currency, you are participating in the foreign exchange (forex) market. In fact, the forex market is the quiet giant of finance, dwarfing all other capital markets in its world.
Despite this market's overwhelming size, when it comes to trading currencies, the concepts are simple. Let's take a look at some of the basic concepts that all forex investors need to understand.
Eight Majors
Unlike the stock market where investors have thousands of stocks to choose from, in the currency market, you only need to follow eight major economies and then determine which will provide the best undervalued or overvalued opportunities. These following eight countries make up the majority of trade in the currency market:
* United States
* Eurozone (the ones to watch are Germany, France, Italy and Spain)
* Japan
* United Kingdom
* Switzerland
* Canada
* Australia
* New Zealand
These economies have the largest and most sophisticated financial markets in the world. By strictly focusing on these eight countries, we can take advantage of earning interest income on the most credit-worthy and liquid instruments in the financial markets.
Economic data is released from these countries on an almost daily basis, allowing investors to stay on top of the game when it comes to assessing the health of each country and its economy.
Despite this market's overwhelming size, when it comes to trading currencies, the concepts are simple. Let's take a look at some of the basic concepts that all forex investors need to understand.
Eight Majors
Unlike the stock market where investors have thousands of stocks to choose from, in the currency market, you only need to follow eight major economies and then determine which will provide the best undervalued or overvalued opportunities. These following eight countries make up the majority of trade in the currency market:
* United States
* Eurozone (the ones to watch are Germany, France, Italy and Spain)
* Japan
* United Kingdom
* Switzerland
* Canada
* Australia
* New Zealand
These economies have the largest and most sophisticated financial markets in the world. By strictly focusing on these eight countries, we can take advantage of earning interest income on the most credit-worthy and liquid instruments in the financial markets.
Economic data is released from these countries on an almost daily basis, allowing investors to stay on top of the game when it comes to assessing the health of each country and its economy.
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