The Forex Market is so huge that it literally encompasses most of the human race within it.

This article will explore the different individuals, businesses and institutions who take part in the Forex Market.

Let’s start with the institutions first.

Central Banks

Central banks take part in the Forex Market primarily for the following two reasons:
1)    Fix monetary policies
2)    Regulate interest rates

In short, this would affect the supply and demand of their national currency in the financial system. At times, some central banks are known to “intervene” by buying or selling their own currency. An example is Japan, when the Bank of Japan intervened in 2005 by selling the Yen. This had the effect of “weakening” their currency, which helps their local exporters.

Another recent example is Venezuela, when President Hugo Chavez devalued the Bolivar by 50% in early Jan 2010, also in an attempt to boost exports in a sluggish economy.

Commercial Banks & Hedge Funds

Commercial banks and hedge funds participate in the Forex Market to make money. That is the short answer. In today’s terms, more than 50% of banks’ income is derived from Forex. More so than housing/business loans!

I was in a local bank the other day, and I saw a notice that said, “Interest rates for deposits upwards of SGD300,000 is now at 0.4%.” Is that pathetic or what? And that’s for a WHOLE YEAR! I make more than that in ONE TRADE!

Businesses/MNCs

Businesses take part in the Forex Market for a few reasons:

1)    Hedge against currency fluctuations

Some businesses are more affected in the changes in Forex rates than others. A prime example would be importer/exporters. Japanese exporters are hurt by a high Yen because their competitive edge is lost when their goods become more expensive to importing nations. To off-set these losses, some Japanese companies actually sell USD/JPY in the Forex Market.

2)    Business Costs & Expenses

As an example: A Japanese company based in Singapore would have to pay their overheads/salaries in Singapore Dollars. They also receive revenues in Singapore dollars. At the close of the financial year, the company would repatriate money back to Japan (which would mean converting Singapore dollars to Yen).
On a side-note, do you know that Chrysler, the car company which filed for bankruptcy protection last year, made more money in the Forex Market in 2003 than they did selling cars!

Retail Investors

This is by far, the most interesting group, and the one in which you and I belong to.
Let’s break this group up a little. I’ve identified 3 demographics of retail investors who take part in the Forex Market:

1)    20-35 years old

This group consists of students, young adults and perhaps some married couples. They trade Forex for financial education purposes and to earn a second source of income.

2)    35-50 years old

This group consists of entrepreneurs, married couples, business owners and traders. They trade Forex to have a global view on finance and to diversify their investment portfolio.

3)    50-65 years old

This group consists of housewives and retirees. They trade Forex to pass the time and earn some daily cash income. The “Japanese Housewives”, also known as the “Kimono Traders”, form a significant portion in this group!

Which group do you belong to?

You know what? It really doesn’t matter. The Forex Market is BIG enough for all of us combined! So let’s start this exciting journey today!

It’s one for all and all FOREX!

Here’s 50 questions on Forex! Test yourself – how much do you REALLY know?

1. Do you know that you are involved in FOREX even when you are not trading it?

2. Do you know that by trading FOREX, you are trading the economies of countries?

3. Do you know that the left hand side of the currency pair is always valued at 1?

4. Do you know that CHF stands for Confoederatio Helvetica Franc?

5. Do you know that FOREX was only accessible to the big players such as banks and MNCs in the past?

6. Do you know that by using leverage, a mere $250 can control up to $100,000 in FOREX?

7. Do you know that there are no taxes in FOREX trading?

8. Do you know that your trading strategy is the LEAST important in FOREX?

9. Do you know that ANYONE can be successful in FOREX trading?

10. Do you know that FX1 Academy is one of the few schools that teach extensively on a trader’s state of mind?

11. Do you know that trading more frequently does not equal to more profits?

12. Do you know that the British Pound was the reserve currency of the world before the US Dollar?

13. Do you know that no one has ever succeeded in fighting with the FOREX market?

14. Do you know that you can make more in one trade than what the banks give you in a year?

15. Do you know that compared to stocks, there is no insider trading in FOREX?

16. Do you know that if the EURO moves a mere 5 cents in a EUR/USD trade, you would make USD5,000?

17. Do you know that George Soros made a cool ONE BILLION DOLLARS IN ONE DAY in 1992 from the FOREX Market?

18. Do you know that FOREX is the LARGEST financial market in the world with a daily trading volume in excess of 3.5 trillion US Dollars?

19. Do you know that FOREX has the HIGHEST leverage compared to all other financial instruments?

20. Do you know that FX1 Academy is the LARGEST FOREX Academy in Asia?

21. Do you know that Singapore is the 3rd LARGEST financial centre in the world?

22. Do you know that Singapore is the 2nd LARGEST Forex Spot Market in Asia and 5th in the World?

23. Do you know that unlike the stocks, futures or options market, FOREX is not controlled by any central governing body?

24. Do you know that you can grow $10,000 to ONE MILLION DOLLARS safely in 5 years by making just 3 trades a month?

25. Do you know that you DO NOT need to pay commissions in FOREX?

26. Do you know that 80% of all FOREX trades worldwide is purely speculative?

27. Do you know that the FOREX Market is large enough to pay every person on the planet 600 US Dollars DAILY?

28. Do you know that you can make a profit in FOREX regardless of market direction?

29. Do you know that Kathy Lien’s book, “Day Trading the Currency Market” is the BEST SELLING FOREX book of all time?

30. Do you know that Ed Ponsi’s book, “Patterns & Probabilities” is the 2nd BEST SELLING FOREX book of all time?

31. Do you know that FX1 Academy is closely associated with the 2 world-renowned FOREX experts, Kathy Lien & Ed Ponsi?

32. Do you know that gold prices have an 85% positive correlation with AUD/USD?

33. Do you know that the FOREX Market is open 24 hours a day from Mondays to Fridays?

34. Do you know that you can trade FOREX anywhere in the world with just an internet connection and a laptop/mobile phone?

35. Do you know that you can start trading FOREX with just USD200?

36. Do you know that Asia is poised to be the centre of world wide wealth in the next 10 years?

37. Do you know that in 2003, Daimler Chrysler made more money in FOREX than it did selling cars?

38. Do you know that in June 2008, the exchange rate of the new Zimbabwe dollar was 6,164,500,000 Zimbabwe dollars per 1 U.S. dollar?

39. Do you know that the FOREX Market is 50 TIMES LARGER than all the global futures market COMBINED?

40. Do you know that if I paid you USD1,000 per second, it would take me 112 years to pay you what the FOREX Market trades in A DAY?

41. Do you know that you can NEVER LOSE more than what you started your FOREX account with?

42. Do you know that most banks make about 50% of their income through the FOREX Market?

43. Do you know that compared to 8,000 stocks in the US equity market, there are only 7 major currencies in the FOREX Market?

44. Do you know that oil prices have an 87% positive correlation with CAD/JPY?

45. Do you know that you can practice on a FREE DEMO account before trading in a LIVE account?

46. Do you know that it takes you LESS than a minute to enter a FOREX trade?

47. Do you know that the daily FOREX volume is BIGGER than the COMBINED ANNUAL GDP of Australia, South Korea, Denmark, Switzerland and Sweden?

48. Do you know that 3 million traders can draw 1 million dollars each from the FOREX Market DAILY?

49. Do you know that some FOREX brokers pay YOU to trade with them?

50. Do you know that over the next few years, the FOREX market is poised to hit a mind-boggling 7 trillion US dollars daily?

How BIG is the Forex Market? Can I really make money trading currencies? What are some of the advantages of trading Forex?

I’ve condensed ALL these burning questions into a “Fact Finding List.” Here are the TOP 10 FACTS you MUST know when you trade Forex. Enjoy!

1)    SIZE

Forex is the LARGEST financial market in the world, trading at a staggering 3.5 trillion US dollars in a single day. Because of its huge size, somewhere in the world, there are always buyers and sellers actively trading currencies.

2)    24 HOUR MARKET

Forex is a truly global market that trades 24 hours a day, 5 days a week. This makes it possible for you to set your own trading hours. Most activity takes place between the time the New Zealand market opens on Monday, until the US market closes on Friday evening. In Singapore, this means that the Forex Market is open from 5am on Monday to 5am on Saturday every week without fail.

3)    SMALL TRANSACTION COSTS

There are no commissions charged in Forex, only a small transaction fee called spread. This is not possible in any other market, as brokers charge a commission on each trade in all other markets.

4)    FREE ACCOUNTS & TOOLS

Most online Forex brokers offer free demo accounts along with breaking Forex news and charting services. These are very valuable resources for traders who would like to hone their trading skills with virtual money before opening a live trading account.

5)    MAKE MONEY REGARDLESS OF MARKET DIRECTION

Profit potential exists in FOREX regardless of whether a trader is buying or selling and regardless of whether the market is moving up or down. This can happen because a FOREX trade involves the buying of one currency and selling of another simultaneously. Currencies are generally traded through a broker or dealer and are executed in currency pairs. In essence, this is truly a “recession-proof” vehicle.

6)    HIGH LEVERAGE

Brokers provide unparalleled levels of leverage in Forex. This can go as high as 400 times the trader’s investment. For example, an investment of $300 would allow a trader to control up to $120,000 of any particular currency. Leverage gives the trader the potential to rapidly increase the size of his account while keeping risk to a minimum.

7)    ONLINE ACCESS

With the advance of technology and the Internet, all a person needs to get started trading in FOREX is two things:

1)    A laptop or a mobile phone

2)    An internet connection

With cheaper and readily available internet access all over the world, trading the FOREX market has truly become easier and more robust to every person wanting to embark on a financially rewarding journey.

8)    LOW ACCOUNT MINIMUMS

Individuals can open a live trading account with as little as $250. Budding traders have the choice to start small and grow the size of their account rapidly through the power of compound interest. This allows the trader to learn real lessons on the Forex market without risking high capital.

9)    LIMITED GOVERNMENT REGULATION

There is virtually no government weight in the Forex market because Forex is considered an OTC market – an “over-the-counter” market. This means that there is no central exchange or location for traders to meet. Forex transcends all cultures and national boundaries.

10)    EQUAL ACCESS TO MARKET INFORMATION

Despite the introduction of best execution regulations in Europe and the US, few would disagree that professional traders and analysts in the equity market have a huge competitive advantage in comparison to individual traders. In FOREX, perhaps the only advantage the big banks have is flow information. But FOREX is a democratic market where virtually all participants have access to the same market moving information as everyone else.

To be successful in FOREX Trading, mastery of the following 3 elements is critical:

1) Money Management (30%)

2) Strategies (15%)

3) State of Mind (55%)

Money Management (30%)

Great traders DO NOT risk more than 1% – 5% of their capital per trade. All of you would know this by now. However, it never fails to surprise me when I speak to some students to find out that only a handful actually follow this golden rule.

Prudent money management rules should be observed by ALL traders at ALL times for ALL trades. This helps to protect a trader’s capital and keeps him in the game for the long-term, which should be the perogative of every responsible trader.

Strategies (15%)

There are 7 basic ways to profit from the FOREX Market:

1. Trend
2. Range
3. Reversal
4. Breakout
5. Hedging
6. Arbitrage
7. News Release

A trader can use one or a combination of these strategies in his trading portfolio, depending on his personality. There is no “one” strategy that is better than the other.

State of Mind (55%)

State deals with a trader’s thoughts and emotions. It is by far, the component which will present itself as the biggest stumbling block to a trader’s success. Four human characteristics of fear, greed, hope and ignorance will always rear its ugly head in every trade.

The most difficult emotional interference in trading occurs when long-standing emotional patterns and conflicts spill over into handling the risk and uncertainty of trading.

Here’s some examples:

1) A rebellious teen with unresolved control issues with parents can easily grow up into a trader who rebels against rules and plans, undercutting his own trading

2) A person who has been traumatised by losses of loved ones may find it difficult to handle financial losses in his trading account

3) Someone who never learned to regulate anger and frustration as a child may now find these emotions derailing sound decision making in the financial markets
Please remember that our approach to FOREX Trading will ALWAYS give us insights to our personality. The FOREX Market is not just the largest financial market in the world, it is also the largest mirror to our soul.

Conquer it, be profitable, and you will truly be an UNSTOPPABLE human being.