What is Forex?


Forex is a term that you have probably heard many times, even if you are not really sure what it is. It simply stands for foreign exchange market and it is a market in which currency is traded instead of stocks and bonds and whatever else is traded on other markets that are more popular. Even though people in America might not be that familiar with Forex, it is one of the largest markets in the world and there is a lot of trading going on and a lot of money to be made in it. Even though a lot of trading on this market happens through large multinational corporations that need to pay wages in many different countries and therefore in many different currencies, there are a lot of individual currency traders participating as well in Forex. These traders speculate on the movement of exchange rates just like people on Wall Street would speculate about stock prices – buying or selling on a hunch or proven information that they will either go up or down.

Just like in other markets, even the slightest changes and fluctuations in exchange rates can make you some good money if you know how to play it. The best thing about Forex is that it is a pretty level playing field, especially when you compare it to other trading markets. There really is not much inside information that only a select few people know, and that is why it is so popular. It is easier to understand than most stock exchanges, and you are not handicapped in any way being someone who does not work for a bank or something like that. There is definitely money to be made in the Forex if you study it and learn how it works.

Since there is no inside information or insider tips, this means that everything is very out in the open and easy to follow. In order to follow the fluctuations of these currencies, all you have to do is follow the monetary flows and trends of the global macroeconomic situation. Therefore, there are not that many surprises in Forex if you understand it and know what to expect from various currencies that you follow.

In the Forex, the foreign currencies are all traded one against another. So you are taking a pair of different currencies, which is looked at as an individual product. For example, you are looking at the price of the euro against the dollar. Another great thing about the Forex is that there is no closing time. Since it is so international, it is always open and you can trade all of the time because it operates 24 hours a day. There are always sessions going on. Once the American session ends, you can go look at the European session, and once that one ends, you can head to the Asian session to continue trading.