The forex Market is a network of buyers and sellers operating without a centralized exchange where one currency is transferred for another currency between participants at agreed upon prices.
The word “Forex” describes the foreign exchange of currencies. Forex traders are typically banks, institutional investors, currency speculators, corporations, governments, brokers, individuals and retail investors.
Forex is the largest and most liquid financial market in the world. FX market trades in 1 day what Wall Street trades in 1 month. As of April 2010, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion. United States dollar is the most traded currency of the world, followed by Euro then Japanese Yen. World’s main Forex trading centres include London, New York, Hong Kong, Tokyo and Singapore. Stock Markets operate during normal business hours, while FX market operates 24 hours a day, 5.5 days a week. It starts on Sunday at 5pm EST with the opening of the market in Sydney and Singapore continuing straight through to the New York close on Friday at 5pm EST.
Currencies are bought and sold in units called lots. 1 lot = 100,000 units of base currency. Just like any other investment, with Forex, you want to buy stock low and sell high, or sell high or buy low. When demand increases, price increases. There are many factors for which demand for one currency can increase like: higher interest rates; better return on savings; more national stability; safer and more attractive banking environment tourism—people need the currency while travelling.
Here’s an Infographic explaining basics of Forex Trading:
This infographic is provided to you by CMS Forex.