What is Forex Trading?

Foreign Exchange (forex) is the simultaneous buying of one currency, and selling of another currency. Daily volume in the currency market exceeds $1.4 trillion, making it the largest and most liquid market in the world. Unlike other financial markets, the forex market has no physical location or central exchange. It is an over-the-counter market where buyers and sellers including banks, corporations, and private investors conduct business. Foreign exchange trading takes place in financial trading canters all over the world, including New York, London, and Tokyo creating one cohesive, international market. The huge number and diversity of players involved make it difficult for even governments to control the direction of the market. The unmatched liquidity and around-the-clock global activity make forex the ideal market for active traders. Traditionally the forex market was only available to larger entities trading currencies for commercial and investment purposes through banks. Now, specialized Forex trading platforms allow smaller financial institutions and retail investor’s access to a similar level of liquidity as the major foreign exchange banks, by offering a gateway to the primary (Inter bank) market.