What is Forex Trading?
Forex (or FX for short) refers to the foreign exchange market and is easily the largest financial market in the world, involving $5.3 trillion per day in trading volume. Trading Forex means buying and selling currency pairs on the FX market with the goal of profiting on the difference in prices, and as a result involves both individuals and businesses converting from one currency into another.
Whereas with stocks and commodities there’s a central exchange involved where buyers and sellers can meet to exchange, currency trading occurs on multiple networks of banks, dealers and brokers globally, and hence isn’t confined to any exchange’s timings. Hence, the hours are more flexible and offer FX traders a chance to trade 24 hours a day, 5 days a week.
But timing isn’t the only factor that entices traders into the FX realm, as the sizeable volume of currencies exchanged and the factors that effect currency prices makes it a volatile financial market where traders may profit. Currency prices are effected by multiple factors, including interest rates set by the country’s central bank, economic data, government policy, and demand for their exports.