The foreign exchange market (forex, FX, or currency market) can be a worldwide, decentralised, over the counter financial marketplace for trading currencies. This is the largest financial market worldwide with a amount of over $1.5 trillion every day worldwide*. Total trend trading volume is more than three times the entire of your stocks and futures markets combined.
With Pepperstone, you will get direct accessibility forex ‘spot’ market – a market that deals in the present price of a financial instrument.
Traditionally, retail investors’ only way of gaining access to the foreign currency market was through banks that transacted huge amounts of currencies for commercial and investment purposes. Trading volume has increased rapidly as time passes, especially after exchange rates were able to float freely in 1971. Today, importers and exporters, international portfolio managers, multinational corporations, speculators, day traders, long term holders and hedge funds all use the FOREX market to cover products or services, transact in financial assets or even to reduce the danger of currency movements by hedging their exposure in other markets.
There is not any central marketplace for foreign currency exchange; trade is carried out over-the-counter. The foreign currency market is open 24 hours a day, five days a week and currencies are traded worldwide on the list of major financial centers of London, New York City, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.
In the forex market there is very little or no ‘inside information’. Exchange rate fluctuations are often caused by actual monetary flows as well as anticipations on global macroeconomic conditions. Significant news is released publicly so, at least in theory, everyone in the world receives the identical news simultaneously.
Large corporations trade on the FX market to manipulate revenues and expenses incurred in different currencies through hedging whereby a trade or multiple trades are opened so that you can attempt to minimize around the losses in other trades.
Investors trade currencies to make money. Most forex trading is speculative by analyzing market and political news (fundamental analysis) and/or studying the chart background of a musical instrument (technical analysis). Unlike other asset markets, in forex it can be easy to make money from a currency losing value as it is through the currency rising in value.