Trading for Dummies® 2nd Edition

Chapter 19. Going Foreign (Forex)

In This Chapter

• Understanding foreign exchange markets

• Using money market instruments

• Trading with money

• Discovering risks of money trading

Trading money in the global markets can be a great way to make more of it, but beware that it also can be a lesson in how to lose money quickly. More than $4 trillion is traded every month on the foreign currency exchange (Forex), and yet no centralized headquarters or formal regulatory body exists for this form of trade. London is the main trading center, but New York, Tokyo, Hong Kong, and Singapore are important trading centers as well.

Foreign currency exchange is regulated through a patchwork of international agreements between countries, most of which have some type of regulatory agency that controls what goes on within their respective borders. Thus, the foreign currency exchange actually is a worldwide network of traders who are connected by telephone and computer screens.

Although more international policing of money trading has occurred in recent years, authorities have had some successes exposing scams and frauds that victimize traders, especially newer ones. So if you want to try this wild world of trading, you need to be wary and not depend entirely on what we discuss here in this chapter. Sure, we explain the workings of foreign exchange markets and how the language of the Forex and its risks are unique, but you need to do a whole bunch more training before you ever consider entering this extremely risky ...