Foreign exchange (forex) trading is an increasingly popular market for investors and speculators. The markets are huge and liquid; trading occurs on a 24-hour basis, and there is enormous leverage inherent in the system. Moreover, it is an opportunity to trade on the relative fortunes of countries and economies, as opposed to the idiosyncrasies of companies.
Despite many attractive characteristics, the foreign exchange market is vast, complicated and ruthlessly competitive. Major banks, trading houses and funds dominate the market, and quickly incorporate any new information into the prices.
Foreign exchange is not a market for the unprepared or ignorant. To effectively trade foreign currencies on a fundamental basis, traders must be knowledgeable when it comes to the seven major currencies. This knowledge should include not only the current economic stats for a country, but also the underpinnings of the respective economies and the special factors that can influence the currencies. (For more, see Top 8 Most Tradable Currencies.)
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