What is forex ?

The foreign exchange (forex or FX) market exists wherever one currency is traded for another. It is the largest and most liquid financial market in the world, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. The average daily trade in the global forex and related markets is continously growing and was last reported to be over US$ 4 trillion in April 2007 by the Bank for International Settlement; it is more than three times the aggregate amount of the US equity and treasury markets combined.

The forex market has no physical location and no central exchange. It operates through a global network of banks, corporations and individuals trading one currency for another. The lack of a physical exchange enables the forex market to operate on a 24-hour basis, spanning from one zone to another in all the major financial centers.

How is forex traded?

Currency prices only fluctuate relative to another currency, so they are always priced and traded in pairs. For example, the most traded pair is the euro against the US dollar, for which the abbreviation is EUR/USD. Below are the most traded currency pairs, also called majors:

EUR/USD Euro - US Dollar

USD/JPY US Dollar - Japanese Yen
GBP/USD British Pound - US Dollar
USD/CHF US Dollar - Swiss Franc
USD/CAD US Dollar - Canadian Dollar
AUD/USD Australian Dollar - US Dollar
NZD/USD New Zealand Dollar - US Dollar