What is Forex Trading

Foreign Exchange, Forex or FX for short, is considered one of the most exciting and ever changing markets around. This is where currencies are traded, bought, or sold. Prior to the introduction of the internet, trading in the Forex market was made exclusive to banks, corporations, giants of the financial institutions, and wealthy individuals. However, the internet’s arrival changed all that and has opened the doors of Forex to average investors and has made it possible for them to buy and sell currencies with just a simple click of the mouse.

Unlike other markets, there are minimal shifts in the daily currency. Most of the currency pairs in Forex experience a shift that is no less than one cent per day, which represents less than 1% change in the value of currency, thus making foreign exchange one of the least unpredictable financial markets, which is why most currency speculators rely on the availability of leverage that would increase the value of potential movements.

Forex Trading

Currencies have value to the people of the world; this is because currencies are exchanged to initiate foreign trades and business transactions as well as other leisurely activities such as travelling or even academic purposes like studying in a different country. It is these reasons alone that make the Forex market the largest market in the world. It dwarfs other markets, such as the stock market, in terms of size and traded value that roughly estimates to around $2,000 billion USD per day.

The Forex market is somewhat unique due to the lack of a central market place for foreign exchange. Rather, trades are electronically conducted over-the-counter, meaning that any and all transactions made occur through computer networks between traders from different parts of the world, instead of just one centralized exchange market. The market is operational five and a half days 24 hours a week. Trading is worldwide in the world’s major finance centers such as Frankfurt, Hong Kong, London, New York, Paris, Singapore, Sydney, Tokyo, and Zurich across nearly every time zone. This means that the market can be active during anytime of the day, with price quotes experiencing constant change.