The Basics of Forex Trading

The Basics of Forex Trading

Forex is short for foreign exchange and refers to the conversion of one currency into another. The foreign exchange is the world’s largest and most liquid whose daily average trading volume exceeds $7 trillion. 

Unlike other financial markets that operate within centralized exchanges, the worldwide market has no central marketplace. The currency market is just a global electronic network of banks, financial institutions, brokers, and retail traders,all involved in the buying and selling of currencies. You can trade 24 hours a day, with financial centers around the world; and so at any time, five days a week and in any location around the globe, there are buyers and sellers, making the market the most active and liquid market in the world.  The is constant volatility, which makes it attractive to speculators, investors, and traders alike.

In the past, only central banks exchanged major currencies for their own business and investment. But after 1971, when exchange rates were permitted to trade freely, trading volumes grew as speculators, and foreign firms joined the markets. 

Importers and exporters, financial portfolio managers, multinational companies, speculators, day traders, long-term investors, and hedge funds all use the forex market to invest, pay for products and services, trade in financial assets, or reduce the danger of currency fluctuations by shielding their exposure in other markets. 

However, it is important to note that it is estimated that more than 90% of the daily trading volume is produced as a result of speculative transactions.

Anton Kovacic
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