What is Forex?
by admin on 25/06/10 at 8:57 pm
The word forex comes from two words: foreign and exchange and is also known as FX. This is where you buy one currency while at the same time you are selling another. So what you are really doing is exchanging the sold currency for the one that your are purchasing. Currencies trade in pairs like the Euro-US Dollar or US Dollar-Japanese Yen.
There is no centralized exchange for forex trading which is how they differ from stocks. All the forex transactions take place either electronically or via phone. There are two sources for the daily turnover of the world’s currencies. Five percent is foreign trade and ninety-five percent is speculation for profit. Generally traders will focus on the most liquid and biggest pairs. The major ones are the US dollar, Yen, Euro, Swiss franc, British Pound, Canadian Dollar and the dollar from Australia.
About eighty-five percent of all forex trading is done with the major currency pairs. Forex is the most traded market in the world with an average turnover of 3.2 trillion US dollars. This is a true twenty-four hour market as it moves around the world as each business day begins. It begins in Tokyo, then to London and then to New York.
