Forex
What is Foreign Exchange (Forex or FX)?
Forex describes trading in the many currencies of the world. It is the largest and least regulated market providing the greatest
liquidity to investors. Daily volume in the currency markets is around $3+ trillion. By comparison, the NYSE daily volume averages
$25 billion a day.
The spot Forex market is the most liquid. Spot, meaning that trades are settled within two banking days. There is no central
exchange of physical location. Trading takes place over-the-counter, 24-hours a day directly between the two parties of a trade over
the telephone and electronically.
The following video describes the benefits of trading Forex:
Participants in Forex include central banks, corporations, individual investors and speculators, and hedge funds. With the advent
of electronic trading platforms, self-directed investors and smaller financial firms now have access to the same liquidity as larger
market participants.
Trading, or speculation, makes up 95% of the daily volume. The other 5% of daily volume consists of governments and commercial
companies converting one currency into another from buying and selling goods and services.