| Forex |
|
| Tuesday, 23 September 2008 21:21 |
|
Forex, also known as FX, involves the process of buying one currency while simultaneously selling another. Forex stands for foreign exchange and refers to an over-the-counter style of market. This type of trading involves currencies, which are traded in pairs. For example, a US Dollar and Japanese Yen pair would be displayed as this: (USD/JPY). This market is not like the stocks or futures market because trading does not occur in a centralized exchange. Forex transactions will occur on the phone or through an electronic market (for example, the internet). Traders tend to focus on the largest and most liquid currency pairs—also known as “the majors”. These include the US Dollar, Japanese Yen, British Pound, Swiss Franc, Euro, Australian Dollar, and the Canadian Dollar. Over 85% of daily trading in the market occurs in these major pairs. Daily trading in world currencies comes from two sources: foreign trade and speculation. Foreign trade involves companies buying and selling products in foreign companies, converting profits from foreign sales into domestic currency. A very appealing aspect to forex trading is the 24 hour availability of the market. The market opens Sunday, 5pm ET and closes Friday 5pm ET. Trading opens in Sydney and moves globally as each business day begins in different countries. This is especially useful for investors because they can respond to fluctuations immediate, unlike the other financial markets. |
| Last Updated ( Tuesday, 23 September 2008 21:44 ) |