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The Basic Definition Of Forex Trading


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The Basic Definition Of Forex Trading Forex stands for Foreign Currency Exchange and it is a global market where institutions and people from all over the world can buy and sell currencies. Daily transactions on this market exceed the amazing figure of $4 trillion US. Despite this huge value, this form of trade doesn’t have a formal regulatory body and it is not centralized.

The Forex trading market is regulated through agreements between special agencies in each country. The market doesn’t have a physical location, being only a network of computers and telephones traders use for concluding their transactions.

The main players on this market are the big international banks and financial institutions. The trade the biggest volumes and may influence the market, so their transactions reflect in the variation of the exchange rates. Exchange rates are also influenced by international events, natural disasters, wars, revolutions or various crises that may affect countries and governments.

Transactions on the Forex market are done in pairs of currencies such as USD and Euro, GB Pound and Euro, USD and GB pound and so on. These transactions can record either a profit or a loss, depending on the exchange rates variations. In order to become a Forex trader, one has to use a special software or websites that enable these transactions.

There are multiple Forex trading software programs, each of them having its particularities and advantages for the user. Playing on the Forex exchange market is considered a high risk activity, because the evolution of exchange rates is unpredictable. To make yourself an idea about how this market works, you can imagine yourself travelling outside of your country. Whenever you are abroad and you need to buy something, you have to exchange money, so that you can pay in the local currency.

The exchange happens at a rate which is determined by various parameters of the Forex market and by the evolution of financial indexes.



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