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What is Foreign Exchange (Forex) Trading?

June 14, 2016 By Matt Thomas Leave a Comment


Trading in the Foreign Exchange Market – The Largest Financial Market in the World:

The foreign exchange market, often referred to as either forex or FX, is the marketplace where currencies are traded. The forex market is easily the largest, most liquid market in the world, trading in excess of $5 trillion per day on average. That type of volume allows for instantaneous transactions, which is ideal for traders looking to enter and exit positions quickly and easily. The United States dollar (USD) is the most actively traded currency in the forex market.

A unique aspect of the FX market is that there is no one centralized exchange, and as a result, the trading of currencies is available twenty-four hours per day, five and a half days per week with the help of major financial centers in London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris, and Sydney. When your typical trading day in the United States comes to a close (open from 9:30 a.m. to 4:00 p.m. Eastern Time), the foreign exchange market is just opening up in Tokyo and Hong Kong. For individuals that can’t seem to find the time during market hours to actively trade the U.S. stock market due to their jobs or other obligations, forex can be rather flexible when it comes to personal availability. In the end, currencies need to be exchanged in order to conduct foreign trade and business, which can present profitable opportunities for savvy FX traders.

Related Post: What Type of Trader Are You? The First Step to Trading Successfully

Filed Under: The Daily Dose: Thought-Provoking Questions For Stock Traders

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