What is Forex: A Detailed Introduction to FOREX

What’s forex?
Forex is short for Foreign Exchange. It is a global currency exchange market where foreign currencies are bought and sold for profit. With trillions of dollars exchanges taken place every day, forex is the largest financial market. Moreover, trading in forex market is available 24 hours a day.
Forex trading is all about exchanging currencies
Currencies are traded in pairs. Trading in Foreign exchange market always involves buying one currency and selling another at the same time. However, not all currencies are tradable. Generally, currency pairs can be categorized into major currency pairs, minor currency pairs and exotic currency pairs.
Major currency pairs all contain the U.S. dollar (USD) on one side. They are the most liquid and widely traded currency pairs in the world, including EUR/USD, USD/JPY, GBP/USD, etc. Currency pairs that don’t contain the U.S. dollar (USD) are known as minor currency pairs. The most actively traded crosses are derived from the three major non-USD currencies: EUR, JPY, and GBP. Exotic pairs are made up of one major currency paired with the currency of an emerging economy, such as Brazil, Mexico. Therefore, there are dozens of currency pairs for you to choose.
Who are the major players in forex market?
The major players in forex market include Central Banks, Commercial Companies, The speculators, and Forex Brokers. Central banks involve in the forex market for the purpose of forex management and forex storage. They are not only a forex market player, but also a supervisor. Commercial Companies involve in forex as they need to do business, and on the other hand, mergers and acquisitions between large companies can also create currency exchange rate fluctuations. Speculators come in all shapes and sizes. Some have fat pockets, some roll thin. Because of the high leverage in forex market, speculators can get high profits as well as risk. What’s more, as forex market is decentralized, not centralized as stock market, therefore, forex brokers play an important role in forex trading. They provide various services for forex traders and get commissions from the spreads.

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