Forex – The Great Unknown

Filed under: Learn Forex Trading |

 

It is the most traded market in the world, with around $4 trillion dollars being exchanged every day – hard to imagine. But whenever I mention forex trading to anyone, they know very little, if anything, about it. The first thing people always ask is… “What is forex?”. After explaining that is the exchange of one currency for another, they tend to lose interest. They probably equate it with the chore of exchanging money when they travel abroad. Anyway, the bottom line is, the average person is simply unaware of the leviathan that is the forex market.

 

What is interesting is that most people know at least a little about the stock market, which is actually a much smaller and less traded market. This is probably because there is a lot of media coverage surrounding companies and stocks. It is common to see stock charts on the news and there are also many programs on cable TV that specifically discuss the stock market. However, it is very difficult to find coverage about the forex market. It seems that it is less fashionable than trading stocks – which is odd as the liquidity is better, the charts are more reliable, and it is easy to trade by going long or short. Although this can be done just as easily in stocks by spread betting, the spreads are wider, which cuts any profits. Also, the forex market operates 24 hours per day, so it is much easier for working people to trade the forex market after they come home. However, the stock market will be already closed when most people finish work. So why are people attracted to buying stocks – particularly in the current economic climate?

 

Well, if you buy stocks after a market crash, there is lots of money to be made in long term investing. But there are no guarantees. If only people knew more about the forex market, then they would probably lose interest in stocks rather quickly.

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