What is Forex

In the current world, most of countries have their own currency (money), such as US is using US dollar, UK is using British Pound, Europe is using Euro. If you have ever traveled to another country, you usually had to find a currency exchange booth at the airport, and then exchange the money you have in your wallet / debit card into the currency of the country you are visiting.

You go up to the counter and notice a screen displaying different exchange rates for different currencies. You find "Japanese yen" and think to yourself, "WOW! My one pound is worth 150 yen?! And I have ten pounds! I am going to be rich!!!" (This excitement is quickly killed when you stop by a shop in the airport afterwards to buy a can of coke and, all of a sudden, half your money is gone.)

When you do this, you have essentially participated in the Foreign Exchange market! You have exchanged one currency for another. Or in Foreign Exchange trading terms, assuming you are a British visiting Japan, you have sold British pounds and bought yen.

Before you fly back home, you stop by the currency exchange booth to exchange the yen that you miraculously have left over (Tokyo is expensive!) and notice the exchange rates have changed. It is these changes in the exchanges rates that allow you to make money in the foreign exchange market.

The foreign exchange market, which is usually known as "Forex" or "FX," is the largest financial market in the world. It is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies. Average daily turnover in global foreign exchange markets is estimated at $3.98 trillion

Article Source: www.findyourfx.com

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