When we imagine bustling markets, pictures of bustling stock markets brimming with traders yelling buy and sale orders are likely to be the first thoughts that come to mind. However, there’s a second market that is virtual and huge which is larger than stock exchanges in terms of trading volume and volume: The Forex market. It’s short for “foreign exchange” . Forex trading is the financial centre of the world and its daily volume surpasses $5 trillion. This guide dives into the complexities of Forex trading by revealing its importance, the mechanics behind it and the potential that it provides traders.

At its heart, Forex trading is the process of purchasing one currency and then selling another. It operates as a decentralised market, which means there’s no one-stop exchange location where trades occur. Instead, everything takes place electronically and businesses, banks and individuals playing their part from different parts of the globe and it’s a 24 hour market.

You may be wondering why Forex trading has such a high significance. One of the main reasons is its function in facilitating the international flow of trade and investment. Imagine a scenario like this: a company located in the USA wants to import electronic products from Japan. As this American company earns profits in US dollars (USD) however, the Japanese manufacturer would prefer to receive payment by the Japanese yen (JPY). This is the place where Forex is a factor. American businesses can purchase Japanese yen with their US dollars, which allows the exchange. This process of currency conversion, which is pivotal in global business operations, is proof of the enduring value that is the Forex market. Read More