The foreign exchange market (also known as Forex or FX market) is the largest financial market in the world with over $ 1.5 trillion changing hands every day. That is larger than all U.S. Treasury shares and markets combined !
Unlike other financial markets that operate in a centralized location (ie stock exchange), the currency market around the world is central. This is an electronic network of banks, financial institutions and individual traders, all involved in the buying and selling of national currencies.
Another important feature of the Forex market is operating 24 hours a day, corresponding to the opening and closing of financial centers in countries around the world, starting each day in Sydney, then Tokyo, London and New York. At any time, any place, there are buyers and sellers, making the Forex market the most liquid market in the world.
Traditionally, access to the Forex market has been made available only to banks and other large financial institutions. With technological advances in recent years, however, the foreign exchange market is now available for everyone from banks to money managers to individual traders trading retail accounts.
The time to get involved in this exciting global market has never been better than now. Open an account and become an active player in the world’s largest market.
The Forex market is much different than trading currencies on the futures market, much easier, than trading stocks or commodities.
If you’re aware of it or not, and to play a role in the Forex market. The mere fact that you have money in your pocket makes you an investor in currencies, particularly the U.S. dollar. By holding U.S. dollars, which have not elected to hold the currencies of other nations.
Your purchases of stocks, bonds or other investments, along with money deposited into your bank account, represent investments that rely heavily on the integrity of the value of their currencies denominated in the U.S. dollar.
Due to the change in value of U.S. dollar and the resulting fluctuations in exchange rates, your investments may change in value, affecting your overall financial situation.
With this in mind, should be no surprise that many investors have taken advantage of fluctuating exchange rates, using the volatility of the currency market as a way to increase its capital.
Example :
Suppose you had $ 1000 and bought Euros when the exchange rate was 1.50 euros per dollar. You would then have 1500 Euros. If the value of euro against U.S. dollar increased then you would sell (exchange) your Euros for dollars and have more dollars than you started with.
Example :
EUR / USD 1.5000 means that the last transaction 1 euro is worth $ 1.50 USD.
The first currency (in this example, the euro) is known as the base currency and the second (USD) as the counter or quote currency.
The FOREX plays a vital role in the global economy and there is always a great need to exchange currencies. International trade increases as technology and communication increases.
While international trade exists, there will be a foreign exchange market. The FX market has to exist for a country like Germany can sell products in the United States and be able to receive euros in exchange for U.S. Dollar.
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