Forex Trading: What is Forex?
Forex trading is a term used to describe individuals that are engaged in the active exchange of foreign currencies, often for the purpose of financial benefit or gain. That can take on the form of speculators, who are looking to buy or sell a currency with the goal of profiting from the currency’s price movement; or it can be a hedger that’s looking to protect their accounts in the event of an adverse move against their own currency positions.
The term ‘forex trader’[1] may describe an individual trader on a retail platform, a bank trader utilizing their institutional platform, or hedgers who may be either managing their own risk or outsourcing that function to a bank or money manager to manage the risk for them.
Forex Trading: The FX Market
The foreign exchange market, or forex (FX) for short, is a decentralized market place that facilitates the buying and selling of different currencies. This takes place over the counter (OTC) instead of on a centralized exchange.
Without knowing it, you have probably already participated in the foreign exchange market by ordering imported products such as clothing or shoes, or more obviously, buying foreign currency when on vacation. Traders may be drawn to forex for several reasons, including:
- The size of the FX market
- A wide variety of currencies to trade
- Differing levels of volatility
- Low transaction costs
- 24 hours a day trading during the week
This article will address traders of all levels. Whether you are brand new to forex[2] trading or looking to build on your existing knowledge, this article seeks to provide a solid foundation to the foreign exchange market.
Forex Trading: Two Sides to Every Market
One unique aspect of the Forex
