Forex - the global currency market or currency market or FX, is the market where one currency is traded for another. It is one of the largest markets in the world.
Some participants in this market only seek foreign exchange and their own foreign exchange, for example, international corporations that must pay salaries and other expenses in countries other than where they sell their products. However, most of the market is made up of foreign exchange traders, who speculate on the movements of exchange rates, as others do on the movements of stock prices. Currency traders try to take advantage even of the smallest fluctuations in exchange rates.
In the foreign exchange market there is very little or there is absolutely nothing "inside information". Exchange rate fluctuations are usually caused by real money flows and anticipations of global macroeconomic conditions. When relevant news is released, at least in theory, every person in the world receives the same news at the same time.
Currencies are quoted against each other. Each pair of coins is an individual product and is traditionally annotated as XXX / YYY, where YYY is an international code ISO 4217 three-letter currency that expresses the price of one unit of currency XXX. For example, EUR / USD is the euro price expressed in US dollars, thus 1 euro = 1.2045 dollar.
Unlike the stock and futures market, Forex is indeed the interbank market and Over The Counter (OTC), which means that there is no single universal exchange for specific currency pairs. The international currency market operates 24 hours a day all days between individuals and brokers, brokers and banks, banks and other banks. If the European session ends, the Asian or US session UU. Will begin, so all the world's currencies can be constantly changing. Traders may react to the news when they are released without waiting for markets to be open, as is the case with most other markets.
The average daily volume of international currency trading was 5.1 trillion dollars according to a BIS study in April 2016.
As in any other market, in Forex there is a spread of demand / supply (difference between buying and selling prices). In the main currency exchanges, the difference between the price at which the market will sell ("ask") to the trader, and the price, which the broker will buy ("demand", or "bid" ) Of the same trader, is minimal. Usually it's only 1 or 2 pips. In the price of EUR / USD of 1.4238 a pip is "8" in the end. Thus the EUR / USD demand / offer price may be 1.4238 / 1.4239.
Brokers give their customers huge amounts of margin, thus making it easier for customers to spend more money on the spread of supply / demand. Brokers are not regulated by securities exchange commissions, because they do not sell securities. For the same reason they should not limit the leverage they offer to their customers. In addition, Forex brokers collect and pay the daily interest rate of the currency multiplied by the leverage.
Individual currency traders can trade during the day and night, taking advantage of the 24-hour trading session.
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