More and more people are choosing to enlarge their investment portfolio with foreign exchange trading. Forex investments are considered high risk but with potential for high profits.

Unlike stocks, Forex is mostly a short-term market with deals opening and closing within one day or even just minutes.  The currency trader may have multiple deals open without encountering broker’s fees as Forex is primarily commission free. Forex market makers who offer foreign exchange trading to customers make their money from the spread – the difference between the buy and sell price of a currency.

With three trillion dollars transacted a day, the volume traded in the Forex market is 40 times the size of NASDAQ. The rise of e-commerce on the internet has seen the popularity of Forex as investments grow substantially in just a few years. With the Forex markets located around the globe, online currency traders have the opportunity to trade 24-hours a day. Trading hours are from Monday morning Sydney time, until Friday afternoon New York time.

It is a liquid market as there is always a buyer and a seller. Profit is possible regardless of whether a particular currency is going up or down. The volume of the Forex market and its constant flow around the world means that it would be very difficult for one person or organization to influence the market.

Forex often has higher margins than stocks with up to 1:200 being offered rather than just 1:2. Margin trading leverages every dollar you have by effectively ‘lending’ you money to take advantage of the small but constant fluctuations that occur in foreign exchange.

Forex traders have different reasons for entering the market.  The combination of constant but small fluctuations in Forex rates attracts traders with differing strategies, whether they are looking for long term hedging opportunities or using leverage for short term gains.

Here are some of the key points that make Forex an attractive investment for many:

• 24 hours, 5 days a week trading
• Margin trading with high leverages offered
• Low minimum deposits means trading with small amounts of money is possible
• The Forex market is too vast to be manipulated
• It is a liquid market where there is always a buyer and a seller
• The Forex market is decentralized; it is not conducted on an exchange, and therefore takes place over-the-counter worldwide via web or phone.

Investing in Forex is risky and may not be suitable for every investor. However, with margin trading, Forex offers large potential profits relative to the trader’s capital (initial) investment.