The concept of foreign exchange trading often appears complex to most of us but you will be surprised to know that the world of forex can be made as simple as you want it to be.

The forex market is a worldwide market and it is believed that this $3 trillion daily market is twenty-five times the turnover of the US equity markets. This fact is a big testament to the size and popularity of this market but you will be more surprised to learn that almost 95 percent of forex traders make losses and only a few are able to make long term gains.

Despite this staggering ratio, foreign exchange is still the most explored of all financial markets and this is mainly due to high volatility of the forex market. The desire to make big profits prompts a big majority of investors to jump into this world. However, most traders fail to learn and observe fundamentals of forex trading and end up making huge losses to bring an abrupt end to their trading career.

It is for this reason that potential forex traders are advised to learn the basics of forex trading so that they can maximize forex gains and reduce possible losses to get the most out of the market volatility. Forex traders should always emphasize upon sticking to the basics and their trading strategy even if a few losses come their way. They are also advised to seek the advice of an experienced and successful trader and stick with a demo trading account unless they are quite sure of their forex winning abilities that must be supported with forex profits on a continuous basis.

Let us access some quick facts about the forex market so that all of us are on the same knowledge platform.

Forex market is a worldwide decentralized over-the-counter financial market for the trading of currencies. The reason why currencies are traded is simple - Government and companies require foreign exchange for making purchases and payments for different commodities and services. This trading by government and companies constitutes about 5% of all currency transactions and the other 95% of currency transactions are done for trade and speculation. Since variations in forex values bring profits to traders and speculators in this $3-trillion daily market, investors looking for quick gains have more than just a reason to trade forex.

It is worth noting here that 85 percent of forex trading is done in only United States dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar, and Australian Dollar. This is primarily because these currencies are considered to be the most liquid of all foreign currencies. Currency exchange happens 24/7 and the forex markets open in the financial centers of Sydney, Tokyo, London and New York in that sequence. Investors stay tuned to major economic releases, news, government announcements, and even speeches from eminent personalities before making a decision to buy or sell the currencies. It is also worth noting here that most traders operate in two or more currency markets using arbitrage to gain profits. These traders buy in one market and sell in another or vice-versa to reap benefits of currency prices and make forex profits.