What is Forex Market & Trading?

The word ‘FOREX’ is a blend of foreign currency and exchange. It is the name given to the currency market. 

Simply, Forex is the means through which a network of buyers and sellers transfer currency between each other at an agreed price and can also convert one currency into another. FX or Forex is a decentralized marketplace where banks, institutions, and investors speculate on national currencies. 

What is the Forex Market?

Buy & Sell

Forex Market is the largest liquidity market in the world, with a propelling turnover of around $ 6.6 trillion every day. Individual traders, businesses, banks, investment firms, hedge funds as well as institutions worldwide can trade currencies 24 hours a day and 5 days a week. Thus, it is a continuous and non-stop market in the world. In the Forex market, currencies trade over the counter in whatever market is open at that time, as it does not have any centralized marketplace. This unique feature gives it the name OTC (Over the Counter) market. Instead of a physical building, the Forex market is upon a series of connections develop through computer networks and trading terminals. 

Major commercial centers include London, Amsterdam, Frankfurt, Milan, Paris, New York, Toronto, Bahrain, Tokyo, Hong Kong, and Singapore. That means when the U.S. trading ends, the forex market started in Singapore and Sydney. In short, the forex market can be characterized as extremely active during any hour of the day with a constant change in price quotes. 

What is Forex Trading?

Forex Trading

Forex trading is a process in which traders buy one currency and simultaneously sell another. It involves speculating on currency prices in order to make profits. When exchanging one currency for another, a trader speculates on the rise or fall in the price of one currency against the other, as currencies in this market trade in pairs. Economic, political, and geopolitical factors affect the demand and supply of forex. For example, a trader may buy the Japanese Yen and sell Singapore Dollar, if he thinks that the value of the Japanese Yen will strengthen. The frequency of currency conversion each day makes the price movement volatile for some other currencies. This volatility makes Forex Market & Trading look attractive to traders and enhances the chances of high profit along with high risk. 

Write A Comment

Register for Free
Forex Trading Course

    Claim your Free e-Book