Foreign Currency Exchange Trading tips

Foreign Currency Exchange Trading

The foreign currency exchange markets are also known as the forex market. The currency exchange market is the largest financial market in the world, with a daily average trading volume of more than $2 trillion dollars. These markets operate 24 hours a day and the forex market is a highly liquid market. Most of the trading is conducted electronically or over the phone and today many retail forex traders use the internet and their personal computers. Banks, corporations, insurance companies, and other large financial institutions use the foreign currency exchange markets to manage the risks associated with currency fluctuations. In the past few years, many retail investors have been using the forex currency exchange markets as another possible investment opportunity.

The CFTC (Commodity Futures Trading Commission) warns investors of websites that claim to offer high yield investment (HYIP) opportunities in currency exchange transactions, because it’s one of the most prevalent means of internet fraud. The Commodity Futures Trading Commission has also posted several dummy sites that are representative of typical sites that have been the subject of CFTC enforcement actions.

Todays retail traders do not trade through the "interbank market” as many of the large institutions such as banks and corporations do. The interbank market typically caters to these larger organizations. Be very careful if a broker or trading firm claims their trading is done through the "interbank market” because your losses can be very large and most likely they could be involved in illegal schemes.

There are many legitimate brokers who cater to retail traders so do your homework before choosing your broker. Research is as easy as opening up your favorite search engine, putting the companies name in with the word scam or fraud. Bad companies will be seen immediately and you should stay away from them. If in doubt, choose another company.