What is the FX Market and what does it do?

Basically the FX Market, or more exactly Foreign Exchange Market, is a place where you buy and sell currency simultaneously. Currencies are always traded in pairs and you buy or sell depending on if you believe that one currency will appreciate or deprecate against the other.

For example EUR/USD: In this case the EUR is called the base currency and the USD is called the secondary currency and together they make a currency pair. So if you say: Buy EUR/USD 1.2780 you will pay 1 dollar 27.8 cents for 1 Euro (one unit). 10.000 EUR/USD 1.2780 will then cost 10.000×1.2780 = $12780.

Pretty straight forward right? How hard can it be?

Where can I find this Market?
Well the market is “electronically hanging in the air above you” and the most common way to reach it is through a trading platform provided by a broker. It is considered an Over the Counter (OTC) Market since transactions are conducted directly between two counterparts.

This is a 24 hours a day 5 days a week market. It opens early morning in Australia then moves to Asia – Hong Kong, Singapore and Tokyo to the Middle East, Europe and finally to America where it closes at 5pm New York time. The busiest time is when one market closes and another opens.

It is a huge market where every day over 2 billion dollars are being traded. just to give you some perspective on how much that is, consider the following; all the US equity markets combined does not reach 3% of the volume traded on the FX Market. These huge volumes gives the market liquidity and trades are possible every second around the clock, instantly.

So now we know what the market is. Now we only need to understand it and how to operate in it. Piece of a cake!

Winning or loosing?

This blog will document the world of day trading currency seen from the point of view of an unexperienced person – me.

I never cared much about this area more then letting professionals handle my investments. Since a while back I entered the world of the FX Market – Foreign Exchange Market – where I had the chance to send my money to the other side of the world to let some “unknown” company invest my money with the promise of a pretty noticeable return.

Now as it sounds pretty stupid to do such a thing I just had to do it. Of course i followed one principal rule as I always do when I invest money, especially in this case considering the circumstances. I didn’t invest more then I could afford to loose. This way it wouldn’t be the end of the world if it showed up to be a ponzi or if they weren’t as good as they claimed to be. Now, almost one year later this company has made my investment grow with an average of 14,6% per month and that has raised my interest for this market in particular.

It is said that 95% of the private investors eventually loose their capital and that only professional traders can profit from this market. Now I don’t doubt that for one second but I’m still gonna do some kind of Myth Buster experiment just out of curiosity. I’m gonna take 100.000 USD of what I gained in return this year and give it a try.

Since I’m totally unexperienced I’m gonna take everything from the beginning.