What is Forex?

The Foreign Exchange market (also referred to as the Forex or FX market) is the largest financial market in the world, with over $1.5 trillion changing hands every day. That is larger than all US equity and treasury markets combined! Unlike other financial markets that operate at a centralized location (i.e., the stock exchange), the worldwide Forex market does not have a central location. It is a global electronic network of banks, financial institutions and individual Forex traders, all involved in the buying and selling of national currencies. Another major feature of the Forex market is that it operates 24 hours a day, corresponding to the opening and closing of financial centers in countries all across the world, starting each day in Sydney, then Tokyo, London, and New York . At any time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world. Whether or not you are aware of it, you already play a role in currency trading. The simple fact that you have money in your pocket makes you an investor in currency. By holding US Dollars, for example, you have elected not to hold the currencies of other nations. Your purchases of stocks, bonds, or other investments – along with money deposited in your bank account – represent investments that rely heavily on the integrity of the value of the US Dollar. Due to the changing value of this denominated currency and the resulting fluctuations in exchange rates, your investments may change in value, affecting your overall financial status. With this in mind, it should be no surprise that many investors have taken advantage of the fluctuation in exchange rates, using the volatility of the foreign exchange market as a way to speculate on currency pairs. Traditionally, access to the Forex market has been made available only to banks and other large financial institutions. With advances in technology over the years, however, the Forex market is now available to everybody, from banks to money managers to individual Forex traders