Trading Forex

"Forex" stands for Foreign Exchange, also known as FX. Forex is an over-the-counter (OTC) or off-exchange market. In a Forex trade, you buy one currency while simultaneously selling another. You're exchanging the sold currency for the one you're buying.

Currencies trade in pairs, like the Euro & US Dollar (EUR/USD) or the British Pound & US Dollar (GBP/USD). Unlike stocks or futures, there is no centralized exchange for foreign currency trading. All transactions happen globally through major banks and brokerages via phone, software and electronic communication networks.


Who trades currencies, and why?
Daily turnover in the world's currencies comes from two sources:

• Foreign trade (5%). Companies buy and sell products in foreign countries and/or convert profits from foreign sales into their domestic currency.
• Speculation for profit (95%).

Most traders focus on "The Majors" which are the biggest and most active currency pairs with the greatest liquidity. In fact, more then 85% of the daily Forex trading volume happens in the major pairs, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.

The world's biggest market, offering 24/5 trading hours!
Forex is the single largest market in the world with volume now exceeding $4 trillion dollars daily.

The Forex market provides the ability to trade around the clock and across borders almost every day of the week. Because of this distinct benefit and the fluid nature of the trading hours, asset managers, hedge funds, investors and traders are seeking the untapped potential of the Forex market. Further, the decline of the equity markets circa 2001, and more recently the mortgage and global economic crisis circa 2007 that is still happening today, has allowed the Forex market to emerge as a legitimate asset class in its own right