The Foreign Exchange, also known as FOREX is actually the largest financial market in the world. How big are we talking about? The volume can go as high as $4 Trillion. That’s not Million or Billion but Trillion! And that figure is just per day, neither per week nor per month. That is how big FOREX is. It can also be called Retail Forex, FX, Spot, Spot FX, or Forex.
As compared to the New York Stock Exchange or NYSE, Forex is far bigger. The New York Stock Exchange trades have a volume of $25 Billion per day. That is far from the $4 Trillion volume that Forex transacts each day. That’s how enormous Forex is. If you total the amount of the stocks and future markets, you’ll have to triple that to reach the amount of daily volume Forex has.
So what is there to know about Forex? You know that it’s a big financial market but what does it really do? It is a financial trading institution. What do they trade is a simple answer. Money! Forex trading is simply a purchasing of a certain currency and then selling another. Simply put, Forex trading involves simultaneously buying a certain currency and then selling another currency.
Now if you are planning to do Forex trading, you will need a broker or dealer to do the trading. At the same time, note that trading is done by pairs. So for example a pair could be the Euros and the US Dollar (EUR/USD) and so on. Reading the description above, it may seem rather easy. However, in reality it can be quite confusing at first. As you see, there’s no physical product that you are buying here. You are buying currency. Buying a currency is like buying shares from a certain country. So take for example, if you are going to buy British Pounds, you are like buying a share in the UK’s economy. Remember that the currency is like a direct reflection of the UK’s economy. The currency shows what the current market thinks about the existing and future health of that certain country’s economy.
Now if you are wondering where you can find Forex, it’s not like any other financial market that has a physical location or central exchange. Forex is like an Over-The-Counter market. This Interbank market is run within a network of banks and is run electronically 24/7. So technically, all you need to do Forex trading is your computer and an internet connection.