Forex is not your average market. This is for multiple reasons. It is unique, and there is nothing like it. For starters, there is no central hub. Trading occurs all around the world at all times. The market day never ends.

That’s right; it goes on twenty-four hours a day. Moreover, when it comes to sheer size, there is nothing that can compare. It is massive. With between $2 and $5 trillion dollars being traded every day, there is not a market in the world that can even consider itself in the same league.

Due to the nature of money, it is incredibly liquid and instantaneous. Traders can quickly react to what is occurring, and the market responds accordingly. There is nothing as rapid, powerful, or risky in terms of world markets. Of the trillions of dollars exchanged every day, roughly $3 trillion is exchanged in the traditional Forex exchange place.

These include spot transactions and swaps. Together, they comprise about one-half of the entire market, and include the majority of all market exchanges.  Below I have provided details regarding these two types of exchanges. There are lots of other kinds of exchanges, but for now, it is important to understand these.

Sometimes forward-transactions and spot-transactions can occur simultaneously. During a swap, money is traded between two parties for a specified duration. In this situation, the parties each agree that at the close of the agreed on time, the money must be traded back. Both, in this situation, are betting on their speculation.

A Spot Transaction occurs anytime a buyer purchases a particular currency with another currency.  This is usually a two day process, and consists of the immediate exchange of two separate currencies.

We are dealing with a market that has numerous participants trading a significant portion of the total market volume.  Nevertheless, small players can earn a living too. It is a big sea, and there is food for everyone. The biggest participants consist of governments, world banks, and other massive financial organizations. For instance, roughly 75% of everything traded is done through the top 5 to ten players.

One great feature of Forex is that there are really only a couple currencies to watch out for. It is true that there are many currencies, but many successful traders stick with just three and at most four. The reason for this is that everything else depends on the relationship between these big currencies.

There are a total of seven major ones in play, but unless you are an expert who has been around many years, you want to keep yourself focused on the big three. For instance, the USD, meaning the United States Dollar comprises almost 90% of trades every day. Second to the dollar is either the Euro or the Yen. Sometime the Pound can be a big player.

So compared to the thousands of stocks being traded in the world’s markets, a savvy investor can do quite well while only watching three currencies. It takes time, but at least the starting point is clear.