What is Foreign Exchange Trading?

The Forex is an exchange market for the world's money. This is where traders speculate on the exchange rates of currency, hoping to buy currency that is increasing in value and selling currency that is decreasing in value.

The Forex market is used to trade currencies of various countries. The currencies of the world are put up against each other with the gamble that one will in fact do better than the other.

With the elimination of the gold standard, major international currencies fluctuate constantly throughout the world market. Therefore, even minor changes in currency values can provide a profit or loss for the holder.

Although the New York Stock Exchange is one of the largest in the world, Forex is even larger with more than $1.5 trillion dollars traded each day. Note that this makes the Forex market 100 million times larger than NYSE. Forex has become the absolute mother of all trading markets, yet transactions to exchange currency for travelers or business account for only five percent of its business.

There is no building where buyers and sellers meet for the Forex market.  There are no brokers hanging around.  The Forex market is a virtual market and all of the trading takes place over the phone or online.

A Forex trading day spans six continuous days. Starting in Sydney, it moves to Tokyo then to Frankfurt, London and then New York before going back to Sydney. The Forex trading week closes in New York on Friday night. At any time of the day or night, someone is trading on the Forex market during this week.

Due to the longer trading hours available to investors, they are able to accurately estimate on what is happening across the world in other markets. When another market reports any increase or drop, this represents the current state of the market.


What is Forex Exchange Trading?