More than 1.5 trillion dollars are traded on the Forex market each day,
compared to less than 60 billion on the New York Stock Exchange.
A large percentage of those trades are made by huge investment banks,
BNP Paribas Securities, and
Mizuho Financial Group, among others.
Yet many individuals participate in Forex trading as well.
Compared to the large investment banks, which actually buy and sell
hard currency, smaller-volume traders, like individuals, don't ever see
any hard currency. Instead, they speculate — on the price
at which the large banks will buy and sell the currencies.
Forex is so attractive to these speculative traders for a couple
First, the market is open 24-hours a day. The global Forex
market is traded in three sessions: the North American session,
which runs Monday through Friday from 8:00AM EST to 5:00PM EST (except
on Friday, when it closes at 4:00PM); the Asian session, which runs
Sunday through Friday 7:00PM EST to 6:00AM EST; and the European session,
which runs from 2:00AM EST until 11:00AM EST.
Second, the Forex market is more highly leveraged than many other
markets. That means you can speculate on $100,000 worth of currency
with only $1,000 in your account (or sometimes less).
Third, there are no restrictions on entering long or short
positions. You can sell just as easily as you can buy —
opening up twice as many trades than if you were limited
to long positions.
Just as online stock trading is not for the amateur investor, trading
the Forex market without the direct help of a broker is wise only if
you can read charts, conduct technical analysis, and understand
the kinds of news that affects the Forex market. Many online
Forex brokerages will let you test your skills for free with a demo
account — so you can see if you know enough to trade profitably
before you put your hard-earned money on the line.
For information about foreign exchange brokers, visit the
Forex Brokers Information Table. Please note that trading
foreign exchange currencies on margin may not be suitable or prudent
for all investors. Forex trading is a speculative activity that
involves a substantial level of financial risk.