OVERVIEW
What is Forex?
Forex, also known as foreign exchange, FX, or currency trading, is a decentralized global market that allows the exchange of one currency for another. The forex market is the largest, most liquid market in the world with an average daily trading volume exceeding $5 trillion. All the world's combined stock markets don't even come close to this.
If you’ve ever traveled to another country, you usually had to exchange your currency. You had to find a currency exchange and exchange money you have into the currency of the country you are visiting.
You probably noticed a screen displaying different exchange rates for different currencies.
In trading terms, assuming you’re a Filipino citizen visiting America, you’ve sold pesos and bought dollars.
Before you fly back home, you notice that exchange rates have changed. You miraculously spend zero dollars and want to exchange all dollars back to pesos. Now the exchange rate is 54 USD/PHP. You exchange it and you get 54 000 pesos. This is 4 000 pesos more than you had before.
You are traveling to the US and find that the US dollar is worth 50 Filipino pesos. You want to change 50 000 pesos and you get $1 000. When you do this, you’ve essentially participated in the forex market! You’ve exchanged one currency for another.
This is basic a principle of how trading on the forex market works.
It’s these changes in the exchange rates that allow you to make money in the foreign exchange market.
However, thanks to modern technology it’s much simpler now. You can do everything with your laptop or smartphone from your home.
The forex market is open 24 hours a day and 5 days a week, only closing down during the weekend.
So unlike the stock or bond markets, the forex market does NOT close at the end of each business day.
To learn more, we recommend you to schedule a FREE consultation with our trading experts.
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