What is Forex Trading?

What is Forex Trading?

Foreign Exchange or FOREX trading is like an arena where a nation’s currency is exchanged for another nation’s currency. The Forex is the world’s largest financial market. This is because it is estimated that $1.9 trillion are exchanged on a daily basis. It is said to be three times more than the aggregate amount of the US Treasury and Equity markets combined.

The Forex market is unlike any other financial market because it has no physical location or central exchange place. Instead Forex trading works through global networks of corporations, individuals, and banks that are all trading one currency for another. The lack of physical exchange makes the Forex market work on a 24 hour basis.

The Forex trading world also needs to work on a 24 hour basis. This is because every country has got different time zones. E.g. when a client would like to buy or sell money from a country in the opposite end of the world; the Forex traders need to be operational no matter if it’s already past midnight.

Before, retail investors interested at Forex trading only way to gain access to the Forex trading world was through banks that had transacted large amount of currencies. Those banks that had bought large amount of foreign currencies use the money for investment and commercial purposes.

Forex trading rapidly increased over time especially when foreign exchange rates transactions floated freely in 1971. Today Forex trading is done by importers and exporters, long-term holders, international portfolio managers, speculators, day traders and multi-national corporations. All of them use Forex to transact in financial assets, pay for services and goods, or reduce the currency risk movements by hedging exposure in other markets.

Currently, the Forex trading market consists of 4500 banks and other financial institutions that trade currencies between themselves. Because the market is so huge there is no organization that can take control over it. Not even the biggest government banks can take control of the Forex trading market. This is another reason that governments can not interfere and transactions go on freely.

For a reader, all the things mentioned above means that making small or large investments should be no worry. This is because you will not be left at a position where you cannot sell what you have bought.

Another thing about Forex trading is that because of its size, transactions need to be moving pretty fast. New deals will always be made all the time and will always be subject to change.

If you would love to make money at the comfort of your home and still be upbeat. Trying Forex trading may be the right way for you to earn an income.