Forex Guide

The Forex market is a massive market involving over $1trilion dollars traded every day, offering outstanding opportunities for the intrepid private investor.

By timing investments correctly, and by using the leveraged nature of Forex investments to one’s advantage, the private investor can enjoy substantial gains on the back of a relatively modest cash outlay. While Forex is huge, easily dwarfing other global markets such as equities and commodities, private investors make up a tiny proportion of this market.

This is because central bankers, commercial and investment banks, and hedge funds such as the Quantum fund, which is managed by George Soros, all speculate with billions of dollars on a regular basis.

The private investor, therefore, faces formidable competition and just as there are opportunities for substantial profits, losses can be equally dramatic.

Since all currencies are priced relative to each other, an increase in the value of one currency means that, by definition, another currency must have fallen in value. This makes the Forex market inherently more risky than other markets, which are expected to produce long term growth in value.The Forex market is also relatively new, only emerging after the collapse of the Bretton Woods system of fixed exchange rates in 1971.

According to the trade association, International Financial Services London, average daily global turnover in traditional foreign exchange market transactions totalled $2.7 trillion in April 2006. This ranks the Forex market at several times the size of the combined daily turnover of the world's equity markets.