BROWSE

Forex

Definition

The foreign exchange market is a global decentralized or over-the-counter market for the trading of currencies. This market determines the foreign exchange rate. It includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of trading volume, it is by far the largest market in the world, followed by the Credit market.

Forex is the abbreviation for Foreign exchange. The Forex market is the place where currencies from all over the world are traded. The Forex market is also called the currency trade market and FX market. It is the largest and highly-liquid market worldwide. On average, currency trading reaches a value up to trillions of US dollars every day.

The Forex market allows participants from across the globe to buy, exchange, and sell currencies. Unlike other markets, the Foreign exchange market has no central depository or marketplace. Instead, all trading takes place over the counter through a widespread network of international brokers and dealers. Also, participants can trade currencies anytime they want. The currency trade market is accessible 24 hours and 5 days a week.

Major Financial Centers for Forex Trading

Some of the leading centers for Forex trading include:

  • London
  • New York
  • Tokyo
  • Frankfurt
  • Hong Kong
  • Zurich
  • Paris
  • Sydney
  • And Singapore

How Forex Traders/Speculators Operate?

To increase gains from Forex trading, speculators tend to buy currencies that they think will rise in value and simultaneously, sell currencies that they believe will reduce in value. This allows them to keep growing their currency portfolio and profits.

Factors that Impact the Exchange Rate

The most common factors that may impact the value of currency exchange rate are:

  • The country's monetary policy
  • Political stability
  • Interest rates
  • Imports and exports

Therefore, it is very rare that the currencies of two countries will be similar or identical in value. The value of the currency keeps on fluctuating depending on the supply and demand. For example, an increase in the supply of currency of a country and decrease in its demand can drop its value. Similarly, a decrease in the supply of a country's currency and increase in its demand can cause the value to rise.

A major benefit of trading Forex is that participants can buy and sell currency pairs at any time and that there is no 'bear market' in Forex. Participants can make and lose money in the Forex market regardless of whether it is trending upwards or downwards. To improve gains through Forex trading, it's important to have a good understanding of the economic condition of the currencies you wish to trade in, so that you can make informed decisions at the right time.


Further Reading


Uncertainty about fundamentals and herding behavior in the FOREX market
www.sciencedirect.com [PDF]
… Most commonly, models of finance with interacting agents consider two groups of traders: chartist and … In this paper a heterogeneous agent model of the FOREX market is presented … The 'disconnect puzzle' is a vastly reported stylized facts in economics (Obstfeld and Rogoff [20 …

Measurement of EER of RMB and its Effect on International Trade and Forex <span style=[J]' src='/thumbnails/?img=http%3A%2F%2Fen.cnki.com.cn%2FArticle_en%2FCJFDTotal-GJJR200704008.htm' />Measurement of EER of RMB and its Effect on International Trade and Forex [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-GJJR200704008.htm'>PDF]
… Most commonly, models of finance with interacting agents consider two groups of traders: chartist and … In this paper a heterogeneous agent model of the FOREX market is presented … The 'disconnect puzzle' is a vastly reported stylized facts in economics (Obstfeld and Rogoff [20 …

What is the Optimal Forex Reserve given China's Current Forex Scheme <span style=[J]' src='/thumbnails/?img=http%3A%2F%2Fen.cnki.com.cn%2FArticle_en%2FCJFDTotal-GJJR200807013.htm' />What is the Optimal Forex Reserve given China's Current Forex Scheme [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-GJJR200807013.htm'>PDF]
… Most commonly, models of finance with interacting agents consider two groups of traders: chartist and … In this paper a heterogeneous agent model of the FOREX market is presented … The 'disconnect puzzle' is a vastly reported stylized facts in economics (Obstfeld and Rogoff [20 …

Intraweek and intraday trade anomalies: evidence from FOREX marketIntraweek and intraday trade anomalies: evidence from FOREX market
www.tandfonline.com [PDF]
… Most commonly, models of finance with interacting agents consider two groups of traders: chartist and … In this paper a heterogeneous agent model of the FOREX market is presented … The 'disconnect puzzle' is a vastly reported stylized facts in economics (Obstfeld and Rogoff [20 …

An Empirical Study on the Effect of Forex Purchase on China's Monetary Policy <span style=[J]' src='/thumbnails/?img=http%3A%2F%2Fen.cnki.com.cn%2FArticle_en%2FCJFDTotal-TJYJ201104004.htm' />An Empirical Study on the Effect of Forex Purchase on China's Monetary Policy [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-TJYJ201104004.htm'>PDF]
… Most commonly, models of finance with interacting agents consider two groups of traders: chartist and … In this paper a heterogeneous agent model of the FOREX market is presented … The 'disconnect puzzle' is a vastly reported stylized facts in economics (Obstfeld and Rogoff [20 …

Position for Forex Purchase and Excess Liquidity of Chinese Banking System <span style=[J]' src='/thumbnails/?img=http%3A%2F%2Fen.cnki.com.cn%2FArticle_en%2FCJFDTotal-DJGL200903020.htm' />Position for Forex Purchase and Excess Liquidity of Chinese Banking System [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-DJGL200903020.htm'>PDF]
… Most commonly, models of finance with interacting agents consider two groups of traders: chartist and … In this paper a heterogeneous agent model of the FOREX market is presented … The 'disconnect puzzle' is a vastly reported stylized facts in economics (Obstfeld and Rogoff [20 …

Could a trader using only “old” technical indicator be successful at the Forex market?Could a trader using only “old” technical indicator be successful at the Forex market?
www.sciencedirect.com [PDF]
… Most commonly, models of finance with interacting agents consider two groups of traders: chartist and … In this paper a heterogeneous agent model of the FOREX market is presented … The 'disconnect puzzle' is a vastly reported stylized facts in economics (Obstfeld and Rogoff [20 …

Are cryptocurrencies connected to forex? A quantile cross-spectral approachAre cryptocurrencies connected to forex? A quantile cross-spectral approach
www.sciencedirect.com [PDF]
… Most commonly, models of finance with interacting agents consider two groups of traders: chartist and … In this paper a heterogeneous agent model of the FOREX market is presented … The 'disconnect puzzle' is a vastly reported stylized facts in economics (Obstfeld and Rogoff [20 …

Should we pay attention to investor attention in forex futures market?Should we pay attention to investor attention in forex futures market?
www.tandfonline.com [PDF]
… Most commonly, models of finance with interacting agents consider two groups of traders: chartist and … In this paper a heterogeneous agent model of the FOREX market is presented … The 'disconnect puzzle' is a vastly reported stylized facts in economics (Obstfeld and Rogoff [20 …

Modern approaches to efficient market hypothesis of FOREX–the central European caseModern approaches to efficient market hypothesis of FOREX–the central European case
www.sciencedirect.com [PDF]
… Most commonly, models of finance with interacting agents consider two groups of traders: chartist and … In this paper a heterogeneous agent model of the FOREX market is presented … The 'disconnect puzzle' is a vastly reported stylized facts in economics (Obstfeld and Rogoff [20 …



Q&A About Forex


Where does the forex market take place?

The forex market takes place over the counter through a widespread network of international brokers and dealers.

How many days a week is it open?

It is open 24 hours and 5 days a week.

What does Forex stand for?

Foreign Exchange.

What is Forex?

Forex or foreign exchange is the abbreviation for foreign exchange.

Who can participate in the forex market?

Anyone from across the globe can participate in this market.