Introduction to the Forex Market

By Vojtěch Jirásek The foreign exchange market had been the domain of large financial institutions, corporations or central banks. Internet enabled individuals/investors to buy and sell currencies easily with the click of a mouse. On one hand the forex market provides great opportunity for investors because of the extreme liquidity and the availability of high leverage, which led to rapid growth of the market in general. On the other hand in order to be successful, an investor must be familiarised and understand the reasons behind daily currency fluctuations. This is because the high leverage can not only accelerate large profits, but also mass losses. There are 8 main causes of fluctuations in exchange rates, and most are related to the trading relationships between countries and rest are a response to the supply of and demand for international money transfers.