FOREX MARKET...101...

I always have an interest in finding opportunities (provided there ethical, morally upright and within the law), which have a potential of earning me some return. Recently I have been trying to fully understand the Forex market and below is some basic introduction of the concepts that an interested person should familiarize him/herself with.
· Kenyans should start preparing the ground works by learning as much as they can about this investment options since the landing of fibre optic cable and possibility cheap internet might provide a conducive environment for individual participant in this trade.
· It will provide an opportunity where investors will worry less about market manipulation since due to its size and nature it’s very difficult to be manipulated and altered even by the big boys aka central bank. I.e. its global trade.
· Since it’s global and operates in different time zone, it’s the most liquid and truly 24 hours a day market.
· Currencies are always traded in pair called currency pair (USD/KSHS). This is done by going short on one i.e. selling and going long on another i.e. buying.
· The confusion: often we usually realize that the currency fluctuation are so minimal, mostly less than 1% a day and we wonder how then do traders make there huge gains.
· The answer: even though the fluctuation are so min leverage provided to you by your broker provide an opportunity to make either very huge profit within minutes or loss. Note it is a very risky venture and news is always quickly reflected in the market.
· Generally leverage will provide an investor with opportunity to control very huge position with relatively little upfront cash.
· For example a leverage of 100:1 means an investor can control a position of $100,000 with only having to put $1000 and the broker leveraging the remainder.
· In the above case if the currency fluctuate 1% favourable the investor will make about $ 99,000. If it’s the vice versa then he will loose everything.
· This is what make its very appealing to speculators and risky too especially if you don’t fully understand the concept.

Type of Markets/ ways of trading
1. Spot market
· Become common among individual traders due to electronic trading (internet)
· When individual claims he is an FX trader he is referring to this.
· Price a determine by demand and supply which can be affected by among other things; interest rates, economic performance, sentiments towards ongoing political situation (local and international), perception of performance of one currency in relation to another.

2. Forward and Futures Market.
· Mostly used by corporations and multinationals involve in foreign trade and wants to protect themselves against currency fluctuation.
· Doesn’t involve actual currency trading but rather contract between two parties.
· Forward contract is transacted over the counter and futures are done in an organized trade.

Conclusion.
It doesn’t hurt to learn, when you have the knowledge you are in apposition to take advantage of an opportunity as it present itself. But be warned this option is risky, you will have to equip yourself with all the knowledge you need, and the above is just a very basic introduction. I will be sharing more as we go along and localize it to better suit our environment.