Forex Trading transpires on a world wide decentralized exchange that is an over-the-counter financial market for the exchange of currencies. The purpose of forex currency trading is to assist in international trade and investment. The FX trading market provides businesses the ability to convert one currency into another. For example, if a U.S. business is importing European products it will have to convert its dollars over to Euros in order to pay the European country. The forex market facilitates these types of transactions. The forex Currency Trading market boasts the biggest daily volume of any financial market in the world, this allows for very dense liquidity which is the main reason why so many retail speculators are drawn to forex trading.

The global economy does not rest, there are always international business transactions taking place between companies located in different countries that use different currencies. The FX market allows around the clock business transactions to take place. There is no waiting for the market to open as with stocks or commodities; the FX market is always open, 24 hours a day 6 days a week. Most FX trading takes place over the internet, in this way it has enabled retail traders to easily get involved in speculating, which has worked to further the depth of liquidity in the forex trading market.

The catalysts that drive forex trading are mainly macroeconomic mechanisms such as central bank interest rates, inflation policies, and monthly economic reports. As such, these relatively stable mechanisms allow the forex currency trading market to be a great fit for technical trading and especially for the utilization of simple forex trading methods like price action analysis. There generally will be a few big economic news release price spikes throughout the month but the rest of the time the forex currency trading market moves very technically , and as such, lends itself nicely to the simplicity of price action trading.

Forex trading is very attractive to both retail and commercial traders alike due to the availability of high leverage. Leverage lets you control a very large amount of currency for substantially less than the value of the currency you are trading. Leverage, however, is a double edged sword because the amount you risk is also leveraged, so while leverage does enable you to potentially make large profits relatively quickly it also enables you to lose large sums of money equally as quickly. This is one of the reasons why it is often said that 90-95% of forex traders fail. While FX trading can be a potentially very lucrative profession, it needs to be met with a healthy dose of discipline and objective decision making.

Speculative FX trading is perhaps the most popular and wide spread form of retail trading largely because of its global accessibility and low start up costs. However, due to the ability to leverage higher amounts of money and easy access, new forex traders need to be aware of the possible pit falls and risks involved with speculative FX trading. That being said, with a simple yet effective trading method and a healthy dose of passion, discipline, and objectivity, anyone with a willing attitude has the potential to become consistently profitable at forex trading.