Individual Speculators and the Popularity of Forex Trading

Forex stands for Foreign Exchange Market. This is where currency trading is conducted among large banks, corporations, governments and other large institutions. Beginning in the mid 1990s the internet made Forex trading available to individual speculators as  well and its popularity has grown enormously ever since. Now about 95% of the trades are carried out by speculators.

The Forex market is probably the largest and most liquid market in the world. The trading day is 24 hours starting 5 p.m. EST Sunday through 4 p.m. EST Friday. Another characteristic that makes Forex trading extremely popular is the leverage available to individual speculators. With leverage of 200:1 the individual speculator can control trades large enough to earn significant profits and with mini contracts now available the individual trader is able to greatly reduce risk as well. The downside to the available leverage is that large institutional players are able to manipulate the market with huge transactions.

Nevertheless, it is possible for individual speculators to make large profits with Forex trading. To become a successful speculator one needs to become educated on the Forex market and the factors that impact the market. There are many factors that will influence the market, but it all boils down to supply and demand. The complex of elements that influence supply and demand can be divided into three categories: economic factors; political conditions; and, market psychology. Understanding and staying abreast of each of these categories is a difficult task but this is what it takes to be a successful trader. Not having adequate information regarding these three categories to use as bases for trades, amount to nothing more than wild guesses and/or pure gambling.

Read the rest of this article