The Forex Market and Its Success Potential

Posted by Nick Niesen on October 29th, 2010

The Forex market (or Foreign Exchange market) has become one of the most lucrative forms of stock trading in history. Until recently, this market was limited to government banks and lending institutions. Today, any investor can take advantage of this profitable market easily.

The Forex market is a sector of the stock market where someone can buy and sell foreign currency by phone, online or other methods 24 hours a day. It is now one of the most profitable and largest markets in the world, with over $2 trillion worth of currency being traded daily!

In this unique market, currency is bought and sold based on the fluctuation of exchange rates. You're actually buying one type of currency with another type of currency and profiting from the difference if you buy and sell at the right time.

For instance, someone who buys Euro dollars with U.S. dollars will profit if U.S. dollars are worth even more at the time of selling (exchanging Euros back into U.S. dollars). It works similar to other stock market ventures except the broker makes money from the difference in the buy/sell amounts for the two countries.

There are three factors that can affect the value of currency and the exchange rate between two countries. Interest rates can change on a daily basis depending on the country's currency value. These interest rates affect the lending rates used to buy foreign currency when borrowing to do so.

The unemployment rate also affects a nation's currency value. The economy is usually very weak at times of high unemployment, thus causing the value of the currency to decrease. A third factor is when major political events take place in a country such as elections, national disasters, wars, etc.

These three factors alone can cause the exchange rates among countries to fluctuate tremendously, and they are worth watching if you're planning to invest in the Forex market.

The Forex market offers plenty of earning potential once you understand how it works. One reason this market is so lucrative is because you are able to trade any time of the day. It's not limited by corporate schedules or anything else.

Another reason you can profit is because brokers will lend you the money to get started - up to 100 times of your cash on hand! So, you'll have tremendous trading power right from the start.

The Forex market is a great business opportunity where you don't have to buy and sell a product, advertise your business or spend endless hours trying to implement new business strategies. You just invest and keep a sharp eye on foreign happenings!

Disclaimer: There is risk involved when you invest in the Forex market as there is with any other stock transaction.