What Forex Is and Not
FX is an acronym for Foreign Exchange. It’s the buying and selling of currencies. The simple analogy
behind this is like the local Bureau De Change (BDC) here in Nigeria, where currencies are traded. For
instance, maybe a friend or uncle in Diaspora sent you some dollars and decided to change it from the
BDC operator or popularly know as aboki, then what you are simply doing is selling the dollar and
buying the naira!
Forex trading was initially conducted and executed between government, central banks commercial and
investment banks via the phones and Reuters but due to the advancement in technology, it’s now being
done over the internet with huge and increasing liquidity through computer screen-based trading with a
click of the mouse and keyboard. And brokerage firms are seriously and eagerly willing to deal with
Nigerians. So, you don’t have problem trading the Online Forex market once you have what it entail to
get started!
This is the only business you can do anywhere in the world as long as there is internet connectivity and
Personal Computer (PC). Trading the online FX market could distinctly different from other
businesses. To be a great investor/trader, you don’t have to transact business in the normal sense and
you don’t have to deal directly with people. You could be anonymous because everything is done
behind internet ready computer screen. It operates through an electronic network of banks,
corporations, and individuals trading one currency for another for round the clock (24 hours, 5 days a
week).
I’m sure you’ve heard a lot about Online Forex Trading, but I want you to take your mind off whatever
negative things you’ve heard, learnt or your miserable experience either through one – three days
seminar(s) that you have attended or what have you; as I take you by hands on step by step guides of
understanding the concepts of trading the FX market.
Forex market is generally referred to as the largest financial market with liquidity. According to the
Bank of International Settlements; the daily volume is almost $4 trillion while approximately $1 trillion
is done in the SPOT FOREX transactions. Therefore, it is estimated that retail trading makes up $55 -
$60 billion in daily global transactions!
The spine of the FOREX market consists of a global network of dealers. They are mainly major
commercial banks that communicate and trade with one another and with their clients through
electronic networks and telephone. The FOREX market operates in a manner similar to the NASDAQ
market in the United States; thus it is also referred to as an over-the-counter (OTC) market.
If I