What is Forex?

  • Forex is an acronym for Foreign Exchange. It is an exchange of currency from one to another in the Forex Trading Market.
  • Forex Trading is the fastest-growing market in the world with a daily turnover of around 6 trillion dollars.
  • The Forex Market is the largest and most liquid asset market in the world because of its reach in trade, commerce, and finance.
  • The Forex Market is not a physical market, and it operates on the Internet across the globe.
  • Currencies trade against each other as exchange rate pairs such as EUR/USD, GBP/USD,USD/CHF, and USD/JPY, etc.
  • Currencies allow people to purchase goods and services locally and across borders.

How does the Currency Market Work?

The Exchanges happen (OTC) Over the Counter Markets. So there is no intermediary required between the Traders. The Traders can Buy or Sell Currencies as per their wish, and there are no limitations in the Trading market. The four major trading centers run the Forex Market from different time zones. They are in London, New York, Sydney, and Tokyo. Since there is no central location, Traders can trade 24 hours a day.

Different Types of Forex Market

  • Spot Market
  • Forward Market
  • Futures Market
  • Option Market
  • Swaps Market

Spot Market

In Spot Market the Exchange of the Currency Pair takes place at the exact point the trade is settled.

Forward Market

A Contract is agreed to Buy or Sell currencies at the specified price set in the future.

Future Market

A Contract is agreed to Buy or Sell currencies at the specified price set in the future. Unlike Forwards,the Futures Market is legally binding.

Option Market

Option Market is same as the Future Market but has an option to buy or option the product.

Swaps Market

A Swap Market is a derivative contract in which on party exchanges or swaps the value or cash flows of one asset for another.