A Brief Overview of Forex Trade

A Brief Overview of Forex Trade

The term foreign exchange, FX and Forex are all the terms used to address the world wide currency trading market. It is the largest and oldest market in the world with a trading turnover of 3 trillion US dollars every day. Only a small section of the Forex trade market represents the currency conversion needs of companies and governments and the rest of the market can only be described as speculative.

The Forex trade is conducted by interbank market unlike the stock market which is conducted by a central market. The interbank market is known as over the counter market. Live trading goes on throughout the world through telephone or electronic media like internet directly between two counterparts. The main centers for the Forex trade include Sydney, Frankfurt, London, Newyork and Tokyo and this worldwide spread ensures that the Forex is a twenty four hour market. This article is dedicated to explain the basics of Forex trade, the overview of the markets involved in trading and how to achieve profits in Forex. The Forex is the largest and the most liquid market in the world and it is categorized as bear market and bull market to better understand the opportunities and risks of the trading in this market.

The currency trading in Forex involves the buying of one currency and selling the other. The currency combination used in trading is termed as cross. The majors or the important currency trades that go on in Forex are EUR/USD, USD/CHF, EUR/JPY and GPB/USD. A part of this currency trading is settled right away on the spot and is therefore called the “spot” market. The spot market is the most important Forex market as it constitutes a large volume of the Forex trade. Initially the Forex was based o barter system but a common benchmark value was set to overcome the limitations of the former system.

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