In recent years there has been a lot of hype around forex trading. Forex refers simply to the foreign currency markets. This is the largest market in the world with over a trillion dollars a day being moved around in trades. It is also the worlds most liquid and global market with trading taking place 24 hours a day, seven days a week, in hundreds of market places around the world. As a result, if offers a number of advantages to traders, particularly active traders who like to live and breath the markets.

One of the big advantages touted about the forex market is that there is zero commission. While it is true that the forex market does not charge commissions, there are what are known as spreads, which allow the market makers to profit. The spread is the difference between the bid and ask price of a particular currency. While the spread is very low, you will pay slightly more for a currency you wish to buy, than you will receive from a currency you wish to sell.

Another advantage of the forex market is that you deal directly with a market maker with the need to go through a broker. This is definitely an advantage given the brokers fees that you can save. It does however mean that you will not receive any advice before you make a trade. However, given the nature of most online brokers these days, you are unlikely to receive any advice from these brokers either.

All of these lower transaction costs straight away mean that it should be relatively easy to profit as a trader on the forex market.

Another element of the forex market is the ease at which your investments can be leveraged. Generally, you can achieve up to 200:1 leverage. This gives traders with smaller sums at their disposal the same chance to receive high returns as can larger investors with huge portfolios.

The forex market also operates in real time which allows you to constantly manage your investments and your risks. With the high leverages that are possible, you will want to keep a very close eye on your risk as you stand to lose a lot very quickly if things dont go your way.