WHAT IS FOREX ?
Quite simply, it’s the global market that allows the exchange of one currency for another.
If you’ve ever traveled to another country, you usually had to find a currency exchange booth at the airport, and then exchange the money you have in your wallet into the currency of the country you are visiting.
The foreign exchange (also known as FX or forex) market is a global marketplace for exchanging national currencies against one another.
Currencies trade against each other as exchange rate pairs. For example, EUR/USD.
Forex markets exist as spot (cash) markets as well as derivatives markets offering forwards, futures, options, and currency swaps.
Market participants use forex to hedge against international currency and interest rate risk, to speculate on geopolitical events, and to diversify portfolios, among several other reasons.
Because of the worldwide reach of trade, commerce, and finance, forex markets tend to be the largest and most liquid asset markets in the world.
What is Traded in Forex?
The simple answer is MONEY.
Because you’re not buying anything physical, forex trading can be confusing.
Think of buying a currency as buying a share in a particular country, kinda like buying shares in a company. The price of the currency is usually a direct reflection of the market’s opinion on the current and future health of its respective economy. In forex trading, when you buy, say, the Japanese yen, you are basically buying a “share” in the Japanese economy.
While there are potentially lots of currencies you can trade, as a new forex trader, you will probably start trading with the “major currencies“.
