However, we must not mistake FX as trading in the futures market where you buy a contract to purchase a particular currency at a future price in time. What FX traders do is much less risky than trading currencies on the market future, much more profitable, and much easier, than trading stocks. So you’re probably wondering where you are in … or … how to access the FX market? The answer is: FX Trading is not bound to a single trading floor and is not centralized on an exchange, as stocks and futures markets. The FX market is considered an “over the Interbank ‘Counter (OTC) market or due to the fact that the entire market is run electronically, within a network of banks, continuously for a period of 24 hours . Yes, if that is the first time I heard of an all-electronic market, I know this may sound interesting to you.

This is what they are actually participating in trading foreign exchange (FOREX) the market: Essentially, like the large banks who use the foreign exchange market to protect themselves from fluctuating exchange rate of different currencies, as an investor, what a FX trader is doing is changing one of the countries simultaneously currency for another. So, in reality, they are an e-commerce currency pair and the price quoted to us is the exchange rate between two currencies. In other words, simply the quoted price is the amount of money is the value of one of the other currency. Example: EUR / USD 1.2850 last – A euro is worth U.S. $ 1.2850 dollars.The first currency (in this example, the euro) is known as the base currency and the second (/ USD) as the counter or quote currency. The FOREX has a daily trading volume of around $ 1.5 trillion – 30 times larger than the combined volume of all U.S.

equity markets. This means that 1,498,574 skilled traders could each take $ 1 million FOREX market every day and the FOREX still have more money than the New York Stock Exchange every day! The FOREX plays a vital role in the global economy and there is always a tremendous need for the FOREX. International trade increases as technology and communication increases. As long as international trade, there will be a foreign exchange market. The FX market has to exist for a country like Japan can sell products in the United States and be able to receive Japanese Yen in exchange for U.S. Dollar. There are a lot of money to be made use of foreign exchange for many of the traders using the trading techniques and tactics that they can benefit greatly. And with only 5% of daily turnover of volume coming from banks, governments and large companies that need to cover the other 95% is for speculation and profit. Omar Vargas Forex trader and freelance writer.