What is Forex?

What is FOREX?

Foreign Exchange, FX or FOREX is the international market where various currencies are bought and sold. The format is to buy one currency and sell the other at the same time. Forex is the largest financial market on the planet, with an average daily turnover of over $1 trillion dollars, which means it is very, very liquid and liquidity is a very important factor when choosing markets to trade. You can trade Forex 24 hours a day. Unlike commodities , Forex has no central exchange.
The most commonly traded currencies are the US Dollar – USD, Japanese Yen – JPY, Euro – EUR, British Pound – GBP, Swiss Franc – CHF, Canadian Dollar – CAD, and Australian Dollar – AUD. The smallest price increments a currency can make are called pips. To calculate the value of a pip, you divide the pip by the rate of exchange and then multiply it by the number of units traded. The forex market is highly leveraged, as much as 100 to 1.

The difference between the bid and ask prices is called the spread. A narrow spread usually signifies high liquidity. Your position must move in your direction by an amount equal to the spread in order to break even on your trade.

The most popular Forex trading is often done using mini contracts, which are 10 times smaller in size than the standard contracts. Typically the standard size for a lot is 100,000 units of the base currency, and 10,000 units if it’s a mini.

4 Comments to “What is Forex?”

  1. The Other Forex Fool 31 January 2010 at 11:06 am #

    Gee a site for the insignificant trader! Glad to see someone appreciates us :)

  2. CBOT 23 February 2010 at 7:27 am #

    FOREX is the international market where various currencies are bought and sold. simply, we can understand FX like that.
    http://www.currencyratecalculator.com is a useful website for trader to check the price of market.

  3. goldoptions 19 April 2010 at 7:00 am #

    Checking your currency online with this.

  4. anne 10 June 2010 at 2:00 pm #

    I think one must get educated to understand forex. There are lots of good resources out there to help aside from this blog. One of the best I have some across is makemoneycurrencytrading dot co dot uk as they run free webinars and training. And they run live portfolio so you can actually see if their strategies are making profit live.
    They also send out a daily report each day with the trades.


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