What is FOREX?

The Foreign Exchange market, also known as "FOREX" or "Forex" or "Retail forex" or FX or "Spot FX" or just"Spot" is the largest financial market in the world, with a volume of about $2 trillion a day. If you compare thatto the $25 billion a day volume that the New York Stock Exchange trades, you can easily see how enormous the ForeignExchange really is. It actually equates to more than three times the total amount of the stocks and futures marketscombined! Forex trully rocks!

What is traded on the Foreign Exchange? The simple answer is MONEY MONEY MONEY. Forex trading is just buying of one currency and the selling of another.Currencies are traded through a broker or dealer,and are traded in pairs;
for example the Euro dollar and the US dollar(EUR/USD) or the British pound and the Japanese Yen(GBP/JPY).

Because you're not buying anything physical, this kind of trading can be confusing. Think of buying a currency as buyinga share in a particular country. When you buy, say, Japanese Yen, you are in effect buying a share in the Japanese economy,as the price of the currency is a direct reflection of what the market thinks about the current and future health of theJapanese economy.

In general, the exchange rate of a currency versus other currencies is a reflection of the condition of that country'seconomy, compared to the other countries' economies. Unlike other financial markets like the New York Stock Exchange,the Forex spot market has neither a physical location nor a central exchange.

The Forex market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market isrun electronically, within a network of banks, continuously over a 24-hour period. Until the late 1990 s, only the big guyscould play this game. The initial requirement was that you could trade only if you had about ten to fifty million bucksto start with!

Forex was originally intended to be used by bankers and large institutions - and not by us little guys .However, because of the rise of the Internet, online Forex trading firms are now able to offer trading accounts to'retail' traders like us.