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Introduction to Forex: What is Forex?

Written by A Forex View From Afar on Sunday, August 10, 2008

Forex or Foreign Exchange is an unregulated market where money is swap for different purposes. Some of them employ goods swaps while other are purely based on speculations

The Foreign Exchange market was initially developed for banks and state own institutions to swap money, thus, sometime the forex market is referred as to the interbanking market. In a while, the forex market’s gates were open for very large hedge funds. This happened at the beginning of the 90s. In the following years, the market slowly became a global currency market where more and more financial institutions were allowed. The year 2000 was a crucial year for the currency market, is the year when retail traders first started to access the Forex’s floors across the globe. This is when the forex truly became a global currency market

At this point in time, the Foreign Exchange market had evolved from a very illiquid market, were gaps were more often than candles to the most liquid market there is. Some analysts are even saying the Forex is the closest market to the perfect market model, where information is widespread, investors take rational decisions and there is no major player that could influence the market all on its own.

We, retail traders, are just a scratch of the market’s total volume. Some even say liquidity in global foreign exchange markets reached $3.98 trillion. This huge volume is divided between hedge funds, banks, commercial companies, central banks.

What is important for every retail forex traders is that the market is opened 24 hours a day and that we can have a great advantage compared with other markets: leverage. To conclude, forex trading offers unique perspective over the financial market, a chance that should not be missed out by anyone.

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Fundies and Trading
There is a constant question from some traders as to why anybody would ever need to consider the ‘F’ word when trading. Fundamentals: what is so damaging at looking at both Technical charts and having a Fundamental filter to gauge how many Lots to put on? Why is it that accepting that Technicals give us price points to trade, but Fundamentals determine the direction that we travel is so difficult for some traders to accept? Without a Fundamental Filter very few pure Technical traders would have seen this Dollar move coming today.

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