Forex – it seems to be a hot topic currently. Everyone seems to be talking about it and I've seen plenty of articles on it. But what if you're clueless? Forex means Foreign Exchange and is the trading of international currencies.
It's when you buy in one currency while also selling in another currency. For example: when you need a currency conversion such as from the U.S. Dollar to the Euro (it is always traded in pairs) such as when you are traveling to another country. Of course your U.S. Dollar won't help you much when you're in Europe. That's where the forex market comes in!
Over one trillion dollars (and sometimes even over four trillion dollars) are traded every single day in the Forex market (which means that it is much, MUCH larger than the New York Stock Exchange and other exchanges).
It is the most traded market (and largest) in the world and everything can change very quickly (but not by much as there are only small fluctuations everyday that equate to less than a one percentage change each day). It all makes sense when reading the latest Forex news here. There are many speculators that speculate in this market but use large amounts of money in order to make any money in the foreign exchange market.
The foreign exchange market is an over the counter market, is available 24 hours a day and 5 days a week (not on the weekends) and trades in the major financial markets. Now how is the value determined?
The exchange rate is all determined by supply and demand within the financial exchange market, which is why everything can change very quickly. Exchange rates are also determined by the countries' gross domestic product, inflation, interest rates, and many other economical and political factors. Prices and rates cannot be manipulated easily like in other industries/markets.
The foreign exchange market is the most liquid market in the world with banks, speculators, retail investors, institutions, companies and everyone else trading it.
Have you thought about Forex? Do you trade in it?
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