What is Forex?

The Forex refers to the Foreign Currency Exchange Market in which over 4,600 International Banks and thousands of small and large speculators participate. Every day this worldwide market exchanges more than USD$3 trillion in dozens of different currencies. With the current growth rate the market is projected to grow to more than $6.5 trillion per day by the year 2005. This exciting and rapidly growing financial market provides the entrepreneur an opportunity to generate profits in the largest market in the world.

How can I make money through the Forex?

The InformForex Group offers a mentoring program to guide you through the steps of making money. When you attend our two-hour training you can learn to trade currencies, part or full time, with the goal of exceeding your present income in a very short time. Trading an average of two hours a day can earn as much as USD$2,000 to USD$40,000 per month, if executed properly.

Learning to trade the Foreign Currency Exchange, the largest legal cash flow industry in the World, can be a very laborious and expensive task without proper training and a mentoring program for guidance.

To date, there are no official documented courses within any U.S. colleges and universities designed to teach Forex trading exclusively. A new trader should consider a quality mentoring program as a shortcut to obtain positive trading information while enjoying the opportunity to miss the downfalls that others have already experienced and suffered. Our mentors are willing to share the secrets of how to avoid the negative side of trading and place an emphasis on obtaining profits from the Forex.

Foreign Currency

The foreign exchange market one of the oldest markets in existence is also now the largest industry on earth and the fastest growing. The numbers are staggering. Over US$3 trillion dollars are traded every day

One day in FX = 75 Days on the NYSE

Official figures show the US dollar on one side of 83% of spot foreign exchange transactions and in 95% of all deals in the swaps market.

The Euro remains the second most important currency in the foreign exchange market with 37%.

The Japanese yen (24%) and the pound sterling (10%) are ranked third and fourth. The Swiss franc’s share was 7% and both the Australian and Canadian dollars accounted for 3%.

As a result the US dollar and the Euro together account for almost all of the trading in the Canadian dollar (98%), the Australian dollar (97%), the Japanese yen (97%), the Swiss franc and the French franc (both 95%) and sterling (93%).

For many years it was mainly the domain of banks and trading for individuals, unless they were extremely wealthy, was not available. Well with the advent of online technology forex trading is now not only available to Investment Funds, Brokerage Firms and Institutions but also to independent individuals. Now you can trade with as little as US$500.

Their reasons for participation vary. Banks have a natural flow of foreign exchange business from their customers, who buy and sell currency according to their individual needs. The banks must then manage their own currency deposits in the changing light of their customers’ transactions. To hedge or not to hedge.

Investment Managers of all kinds now deal globally and so have to take a view on currency, as well as more traditional instruments, such as bonds and equities.

Companies and institutions of all kinds that have foreign customers or suppliers must decide if they should hedge the foreign exchange exposure, which this creates. Exporters have the risk of a rise in the value of their local currency and importers have the risk of a fall in theirs.

As a result non-inter-bank turnover in the foreign exchange market now accounts for about 25% of all transactions

After Bretton Woods

By most estimates the foreign exchange market grew by some 1,200% between 1974 and 1995, following the demise of the Bretton Woods Exchange Rate System.

The System, which tied the US dollar to the price of gold and all currencies to the US dollar, was created at, and named after, an international conference held at the Mount Washington Hotel, in the resort town of Bretton Woods, New Hampshire, in 1944.

Over twenty years of uninterrupted growth in the foreign exchange market is likely to continue, as more countries and companies deal across borders and capital flows increase. How much price volatility there will be in the future is of course the great unknown and also at odds with the wishes of most central banks.

However, as long as there are political and economic events, and natural disasters, the relative value of individual currencies to one another will change, sometimes violently and without warning.

London: Capital of the World

London remains the world’s largest foreign exchange center with daily turnover 35% of the world’s total daily volume.

The next four most important centers are: New York, Tokoyo, Singapore, Hong Kong, Switzerland and Germany.

London remains the most diversified foreign exchange market. In New York 64% is between the US dollar and the four major currencies (Euro, Japanese yen, sterling and the Swiss franc), compared with 55% in London.

In Tokyo the range of currencies traded is even more limited; the US dollar/Japanese yen accounts for 76% of turnover.

Whilst London remains the world’s foreign exchange capital, the North American principals continue to be the most active with a 42% market share.

As we know, there is only one way to make money trading anything: buy lower and sell higher (or sell higher and buy back lower for short sales). To buy lower and sell higher, prices must trend higher from where you bought (or lower from where you sold).

If prices never trended, there would never be an opportunity to make a profit! Furthermore, without up and down price trends, institutional traders (hedgers) would have no need to insure themselves from price changes and trading volume would disappear! What this means is that price trends are the essence of all-profitable trading.

The realization that trends are the essence of profitable trading makes the idea of trading currencies very exciting, because currencies are the worlds best trending markets! Countless studies of trend following systems prove invariably that currency trends are the most consistent and profitable! Regardless of the type of trend following system used; long term, intermediate term or short term, currencies invariably outperform all other markets including stocks, bonds and other commodities. It should come as no surprise that some of the worlds’ most successful traders are currency traders.

One-reason currencies trend better than every other market is because of their macro-economic nature. Unlike many commodities whose supply and demand fundamentals can literally change with the weather, currency fundamentals are much less random and far more predictable. For example, let’s consider interest rate differentials. Assume U.S. interest rates are 4% and German interest rates are 6%. If you could borrow $1,000,000 at 4% from one bank, and invest it at 6% at another bank would you? Of course you would! (With Interbank currency trading you can).

The difference between 4% and 6% will attract international investors to borrow billions of U.S. dollars at 4% and invest them in German marks at 6%. Remember, those interest rate differentials between countries are likely to last for some time. The U.S. would never change interest rates from 4% to 6% overnight nor would Germany change interest rates from 6% to 4% overnight. Large changes in interest rates over a short time could cause economic chaos! So as long as investors can buy German deutsche marks with U.S. dollars and receive sizable profits, billions of dollars will continue buying those deutsche marks pushing prices for them ever higher (a classic trend). This is just one of several important reasons why currency trends tend to be so long and pronounced

In summary, currencies are one of the best all around markets. Interbank Currencies represent the worlds’ largest marketplace, and have the most powerful and persistent price trends. A propensity for strong and sustained price trends give Interbank Currency traders a profit making edge that’s unavailable in any other market!

Trading Times

The Spot FOREX market runs continuously on a 24-hour basis from 7:00 am New Zealand time Monday morning to 5:00 pm New York Time Friday evening. Dealers in every major FX trading center (Sydney, Tokyo, Hong Kong/Singapore, London, Geneva and New York/Toronto) ensure a smooth transition as liquidity migrates from one time-zone to the next.

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