FOREX is the acronym for the foreign exchange market where one type of currency is traded for another type of currency. FOREX is one of the world’s largest trading markets. While some traders on this market are just looking to exchange their own currency for a foreign currency, most participants are currency traders, which means they speculate on exchange rates and their movements, just like traders speculate on stock prices on the stock market. People who trade currency are trying to make money on the fluctuation of rates.
Rate fluctuations on the exchange are typically the result of actual monetary flows in addition to global macroeconomic conditions. All significant news that impacts the market is released publicly, so everyone who is trading on the market gets the news at the exact same time. This reduces “insider information” to almost zero.On FOREX, currencies are traded against each other and are expressed as xxx/yyy where xxx represents one currency and yyy represents the second currency.
So if you are trading euros against the U.S. dollar, one unit would be represented as EUR/USD or 1 euro = 1.0636 dollar. There is no universal exchange for a specific currency pair.The FOREX market is open 24 hours a day, Sunday evening until Friday evening. When the United States trading session ends, another session (Pacific, Asian and so on) will start. This means that all world currencies are constantly up for trade. Traders don’t have to wait until the market opens to react to significant world news. An average of $5.3 trillion is exchanged every day.