What is Forex?

 

The Foreign Exchange market (also called "Forex" or "FX" to shorten the name) is the largest, fastest growing and most liquid financial market in the world, with nearly $5 trillion worth of transactions occurring every day - over 200 times larger than the daily volume of New York Stock Exchange market. Simply, forex is the market in which currencies, or money, are traded. The forex market allows you to buy and sell money.

forex currency market

Forex currency market

 

The forex market is open 24 hours a day, 5 days a week. Unlike other financial markets, the forex market has no physical location or central exchange. It is an over-the-counter market where buyers and sellers including banks, corporations, funds and private investors conduct business. Investors in forex market can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night. The huge number and diversity of players involved make it difficult to control the direction of the market for even governments. The unmatched liquidity and around-the-clock global activity make forex the ideal market for active traders.

 

Traditionally the forex market was only available to "Big Boys" like banks, high net-worth speculators and largest currency dealers trading currencies for commercial and investment purposes. Nowadays, thanks to Internet and modern technology, smaller financial institutions and individual investors (like you and me) have an opportunity to access to the market at the same price fluctuations and exchange rates which only large players used to enjoy formerly. These transactions are made through forex brokers and using trading softwares (also called trading platforms).