What is Forex

In Simple term you can say FOREX is FOREIGN EXCHANGE. You can say the global market that allows you to exchange of one currency to another. When you travel by flight to another country, you usually had to find a currency exchange booth at the airport so that you can exchange the money you have in your wallet into currency of the country you are visiting.

There you found a Notice Screen showing different exchange rate of different currencies. Now think you are coming back from America and having some USD [US Dollars] in your pocket. You find “Indian Rupee” and think of yourself “Wow! 1 USD worth 79 INR” and I have 50 USD, I am going to be rich.

When you do this, you entered in the FOREX Market, you exchanged one currency to another. Or in Trading Term you can say, you sold USD for INR.

Before you fly back to America, you stopped by the same currency exchange booth to exchange INR, leftover after meeting your all expenditure in India and noticed the Exchange Rate have changed. This change in the Exchange Rate allow you to make money in the Foreign Exchange Market.

This Foreign Exchange Market which is usually known as “FOREX” or “Fx“, in the largest financial Market in this world.

Compare with Stock Market

The largest stock market in the world, the New York Stock Exchange (NYSE), trades a volume of about $22.4 billion each day. The Foreign Exchange Market looks absolutely Enormous Giant comparing to NYSE with it’s USD 5 trillion a trade day volume. When people talk about the market, they usually means . So the NYSE sound big, it’s loud and likes to make a lot of noise.

The Currency Market is over 200 times bigger! It;s Huge! The huge USD 5 trillion numbers cover the Global Foreign Exchange Market. But the daily trading volume from the retails traders (that is people like you and me) make between 5-6% of overall volume or you can say between 300-400 Billion.

Where from it operates

Now, this FOREX market operates 24 hours a day 5 days a week, only closing down during weekends. The FOREX market does not close at the end of each business day.

Instead, the trading just shifts to different financial centres around the world.

The day starts when traders wake up in Wellington, then moves to Sydney, Singapore, Hong Kong, Tokyo, Frankfurt, London, and finally, New York, before trading starts all over again in Wellington!