Day trading on the Foreign Exchange Market can be intimidating to new traders. The pragmatics of day trading Forex can be complex and arduous without proper instruction. Day trading Forex provides traders with the opportunity to be flexible and knowledgeable with quick turn around trading. The foreign exchange market is the largest and most fluid financial market in the world. Businesses, corporations, banks, governments, and speculators trade in this market. This makes the average daily trade approximately four trillion US dollars.
Day trading forex can be a quick way to generate a small profit. However, a keen eye and know-how is necessary to ensure this market adventure does not end in catastrophe. With the current ups and downs of the market, day trading can be a painless and profitable endeavor for willing traders who have done their research. The foreign exchange market is widely deemed the most ideal competitive market, with a few exceptions of manipulations by banking institutions. The foreign exchange market is unrivaled because of the large amount of trades, extreme liquidity, number of traders, its geographical dispersion, and twenty-four hour trading days.
Forex trading has been proliferating significantly since 2001. Nonetheless, there is no central exchange or clearing house for the trades since the foreign exchange market is traded directly between the brokers and dealers. This should indicate to individual traders that having a broker with connections is most advantageous. The trades do tend to congregate around specific cities in the world though. London accounts for approximately 34% of all trades. New York City is second with 16.6 percent, and Tokyo trades roughly 6 percent. Additionally, the top ten most active traders account for over 70 percent of the total trade volume. The top ten most active traders are large international banks that are constantly buying and selling on the market. The average daily turnover for the foreign exchange market is 3.98 trillion dollars.
The Foreign Exchange Market is divided into levels of access, unlike an open stock market, and not every trader has equal access to equal pricing. The highest level of access has definitive bid and ask prices which are only available to traders in the inner circle of the market. As the levels descend, the ask and bid prices diverge due to volume, and traders looking for larger transactions can obtain a better deal. Big traders in the Foreign Exchange Market include inter-banks (trading for the profit of the specific banking institution), commercial companies, central banks (trading for inflation and currency control), hedge funds, investment management firms, and retail brokers.
Individuals, retail traders, are a small percentage of the foreign exchange market. They can only participate in the market trading through brokers or Market Makers. Although the brokers are highly regulated and controlled, some traders have had problems with scams. However, recent efforts have helped to diminish the questionable brokers and shady business practices in an attempt to restore faith and confidence in the foreign exchange market. Nonetheless, individual traders should do their research and be advised against scams, such as brokers and market makers trading against their clients. Many brokers implement policies and standards that help to alleviate concern and restore client confidence.
Day trading forex can be a quick and efficient way to generate a profit. With the right tools and assistance, any individual can become a successful day trader. Traders with a keen eye for market signals can generate a hefty profit. Many companies offer tutorials, information, and help. With ample consultations and helpful tutorials, day traders can rest assure that they will be provided with the most up to date techniques, tips, and advice to assist then in their exchange. Day trading forex allows traders to feel flexible and informed when exchanging at high volumes quickly. A short consultation about preferences and interests, and then an online tutorial can help traders achieve their goals of profitable trading.
Andy West is a writer for NetPicks, which offers valuable online day trading forex services.