Forex Trading is associated with The Foreign Exchange Market which is also known as The FX, The Currency Market or The Foreign Currency Market. It is type of exchange which focuses on international currencies. The Foreign Exchange Market is the largest market in the world. It dictates the comparable values of currencies around the world. It is a global, de-centralised market. Trading is done ‘over the counter.’ This makes it different from the Stock Exchange which has a centralised marketplace. Ultimately, The Forex Market decides the value of one country’s currency compared to another. It was formed in the 1970s after restrictions were lifted on foreign exchange and gold exchanged was no longer implemented, fixed exchange rates were instead devised.
The Forex Market assists international trade by authorizing currency conversion and acts as an anchor for trading between buyers and sellers across the globe. Its volume of trading is unique due to the fact it is spread across the world and it is continuously in operation, twenty four hours a day. However, trades cannot be made on weekends. It is also a leveraged form of trading; the amount that can be profited or lost is proportional to the amount invested in. These margins are relatively low compared with other fixed margins in trading.
The Foreign Exchange Market differs further from the stock market as it is split up into levels of access. These levels of access are determined by the amount of money which a trader chooses to invest. At the highest level is the Interbank Market. Individual traders speculate on when the best time to exchange these currencies is, as exchange rates are constantly moving. For example, a trader might decide that the Euro will increase in value and so will then make a purchase using another kind of currency to profit from this exchange.
The Foreign Exchange Market issues a medium for predictions and estimations to be made. The ‘Forex’ itself is a commodity which is quoted by banks across the world, banks vary in their quotes. Forex brokers then assess the range of quotes and estimate averages involving all currencies.
Risk warning: Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.