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The Off Exchange Retail Foreign Exchange Market is commonly referred to as the "FOREX" or "FX" market, and is the largest and most liquid financial market in the world, with a daily turnover of over US $1.5 trillion. By comparison, the New York Stock Exchange average daily dollar daily volume for 2004 was US $46 billion. Forex involves the simultaneous buying of one currency and selling of another traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY). Simply put, Forex is the world currency market. The value of each country's economy is reflected in its currency, so trading FX is like trading the value of countries rather than companies or commodities. It's not new. Currency speculation has been widespread since WWII among the world's banks.

Retail currency trading by individuals and organizations attempting to profit from constantly changing currency prices accounts for up to a quarter of Forex volume. Other transactions include currency swaps by major corporations and central banks to convert profits or hedge against currency price movements.

Greater than 85% of all daily transactions involve trading of the 7 "Major" currencies, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. The best trading opportunities for speculators are with these most commonly traded (most liquid) currencies,

As a 24-5.5 market Forex trading begins in Sydney and in turn opens around the globe as the business day continues, first to Tokyo, London, and New York. Unique among financial markets, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night, in real time.

The FX market is considered an Over The Counter (OTC) or 'interbank' market, due to the fact that Forex transactions are conducted between two counterparts over the telephone or via an electronic network, so trading is not centralized as on an exchange.

 Whether you are a seasoned pro or beginner, the FX market has characteristics that are favorable over other markets:

·         The world's most liquid market

·         24 hour a day trading from Sunday 5:00pm Eastern to Friday 4:30 pm Eastern

·         Low trading costs (no commissions and tight spreads in major markets)

Recent technology has broken down the barriers that used to stand between the end-users of foreign exchange services and the interbank market. The online trading revolution opened its doors to retail clientele by connecting market makers and market participants in an efficient low cost manner. In essence, online trading platforms serve as gateways to the liquid FX market. Average traders can now trade alongside the biggest banks in the world, with virtually similar pricing and execution. What used to be a game dominated and controlled by the "big boys" is becoming a more level playing field where individuals can profit and take advantage of the same opportunities as big banks. However, in these volatile markets, substantial losses can still occur just the same. FX is no longer an old boys club, which means opportunity abounds for aspiring online currency traders.

There are many other features that may convince you that this could be the arena in which you would like to invest. In fact, so far, we've made it sound pretty easy, haven't we? As you must know by now, nothing with such huge reward potential is easy. With big payoffs come substantial risks, and you have to understand how to minimize them.

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