What is Forex?

One of the most attractive markets in the world right now is the Forex market. What people popularly call FX trading, currency trading or forex exchange is what happens in this market.

In the simplest explanation, the forex market is where the currency is traded. It is currently the largest and most liquid market in the world. Its average daily trading volume is about five trillion dollars. Even if all the stock markets in the world were combined, those markets would still be overwhelmed by the enormity of the Forex market.

Fx, Forex or Currency Exchange is usually tagged as Forex. Large financial institutions, firms, companies, banks and wealthy investors specialize in forex trading. They have found greater tray-adding possibilities that other investments cannot meet.

Currency is very significant. These are the means of exchange and without it people cannot conduct business and business. If a person living in America wants to buy a product in Europe, he has to pay in Euros to run the business. The person has to pay in euros to buy that particular product. A tourist traveling in China cannot pay in dollars to visit the Great Wall because the dollar is not a recognized currency in China. Therefore, tourists should first exchange dollars with the Chinese yuan before visiting that magnificent landscape.

Currency exchange is essential for business and various businesses. This is the main reason why the Forex market is the largest market in the world.

The forex market has numerous features that attract investors and traders alike. A notable feature of this huge market is that it is a decentralized marketplace – trading transactions do not take place on a centralized exchange. In the forex market, fx trading is conducted electronically or over-the-counter which means that transactions are made electronically.

Another notable feature of the Forex market is that currencies are traded around the world and in almost every time zone. Currency transactions take place in cities such as London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney – cities with the world’s major financial institutions. Markets in Tokyo and Hong Kong are expected to reopen when the US market closes. Which means the Forex market is open 24/5, 24-hour, five days a week.

There are many ways to trade in Forex such as spot market, forward market and futures market. The most popular way to trade in Forex is through the spot market. It is the largest foreign exchange market in the world due to its underlying asset base in the forward and futures market spot markets.

Previously, the futures market was the most popular market for fx trading. But due to recent technological advances, it has given birth to electronic trading and numerous forex brokers. Since then, spot market activity has grown exponentially and now surpasses the forward and futures markets as the preferred trading ground for investors and traders.

Due to its popularity and attraction to investors, many have come up with many names in Forex such as fx, fx trading, currency exchange, and foreign exchange but these labels refer to a simple market, the Forex market.

Learn more about Forex at Millennium-FX.