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What is the Forex Market

The forex market, also sometimes referred to as FX, foreign exchange market or foreign currency market, is the largest financial market in the world. It is vast, with an average daily turnover of almost $4 trillion. In fact, the forex market is bigger than all the world’s stock and bond markets combined, making it incredibly liquid. The forex market is also highly accessible, operating 24 hours a day except on weekends. Trading is from rom 5pm EST Sunday to 4pm EST Friday.

How does one trade forex? When investors or traders trade stocks or even futures, they do so on a regulated exchange like the NYSE or CME. Trades go through clearing houses so that the trades are guaranteed. There is also a governing body and any disputes on trades go through arbitration – giving you a semblance of order when trading these financial instruments. In the forex market, basically none of these characteristics exist, or if they do, they do so in a self governing manner, which works surprisingly well and is efficient. For beginners or those who are accustomed to trading stocks, the concept might take some time to get used to, but it shouldn’t hinder you from entering the world of forex as there is money to be made – and the manner in which traders regulate themselves is very effective. In fact one way to alleviate concern is by trading with one of the reputable US based FX dealers who are members of the National Futures Association or NFA. The NFA is an independent self-regulatory organization for the U.S. futures market. Members of the NFA agree to binding arbitration should any dispute arise – working in essence like arbitration within the stock market.

How are forex trades carried out? When trading stocks or futures, a broker is used. Whether talking to your broker or trading online, your broker acts as an agent in your stock transaction – taking your order to the NYSE (for example) and executing the trade per your instructions. For their services, the broker is paid a commission. In the foreign currency market, there are no commissions paid to brokers because there are no brokers – just dealers. The dealer takes on risk as they take the other side of your trade and also make no commission. In fact they make their money through the spread between the bid and ask.

These are the basics of forex trading. Besides having no geographical boundaries, it is also very accessible, highly liquid and can be extremely volatile at times. This is important to understand, as with any volatile market, large sums of money can be made and lost in a short period of time. With the right strategies and tools, you can make money from forex trading – why do you think that up to 90% of the daily volume in the largest financial market in the world is traded in speculation by large banks and hedge funds.

Which Are The Next Emerging Market Economies For Investing?

If you’re wondering if the United States of America is an economy on the decline for investing, the sad truth is that you’re right. On the other hand, there are some countries where we are seeing emerging markets, some that you would probably expect and others not so much. As the world becomes more ‘global,’ in that countries are merging market economies and working together more, we are seeing emerging market ETF’s on a faster scale than we had before.

In 2014, China is leading the world’s market growth, and is expected to maintain a rapid rate of growth going forward. GDP growth for China was recently at an astonishing 7.4%, and the consumer market in China is only expected to increase over the next few years. Some economists believe that China is outpacing itself and will ultimately witness the fall of its economy in less than a decade, but due to the massive size of China’s market, this doesn’t seem likely. If there’s a challenge that China will have to overcome in order to keep its economy up, it’s that it will have to deal with the massive inflation it is witnessing in property prices. The Chinese government has introduced laws and policies to deal with this and with the local governments.

Another country with a vastly emerging market is the Philippines. The GDP growth in the Philippines is standing at 6.5% as of 2014, and this figure is expected by economists to remain stable and neither decrease or increase within the next few years. The Philippines have witnessed an increase in consumer spending, but the real secret behind its economic growth is the business sector that has led to massive job creation. The Philippines’ closest competitor right now for GDP growth appears to be China.

You may be surprised to see this entry on the list, but India is seeing a major comeback in regards to economic growth where many economists did not see it coming. India has greatly reduced its budget deficit in recent years, which has lead to an increase in India’s GDP at a growth of 5.7% in the most recent period. It’s too early to yet see whether the government officials who gain power will either continue to put India on a path to economic prosperity or hinder this upward trend.

 

 

 

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