WikiFX:What is Forex?

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What is Forex?
WikiFX · Jan 4, 2022 10:25 AM
Abstract：Forex is the global financial markets that we can trading between different pair of currencies. If one currency is stronger than another and you believe it is right in the end, you can make a profit.
WikiFX
　　Forex is the global financial markets that we can trading between different pair of currencies. If one currency is stronger than another and you believe it is right in the end, you can make a profit. Once upon a time, people fly abroad before the pandemic broke out. When you have to spend something on other countries, you need to find a money changer and convert your money into the currency of the country you are spending. You will notice a screen displaying different currencies rates on the money changer counter.
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　　The currencies rate is the relative price of two different countries currencies .When you find “Indonesian Rupiah” and think to yourself, “Awesome! My one dollar is worth 14,000 Rupiah？! And I have ten dollars! I‘m super rich now!!!”When you doing this, means you're participated in the forex market!You’ve exchanged from your currency for another currency.Or in forex trading terms, assuming you‘re travelling Indonesia, you’ve sold dollars and bought Rupiah.
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　　After you're stop spending, you stop by the money changer booth to change the Rupiah that you and notice the currencies rates have changed.Its these changes in the currencies rates that allow you to make money in the Forex market.
　　What is forex？
　　The foreign exchange market, which is usually known as “forex” or “FX,” is the largest financial market in the world.
　　The FX market is a global, decentralized market where the worlds currencies change hands. Exchange rates change by the second so the market is constantly in flux.
　　Only a tiny percentage of currency transactions happen in the “real economy” involving international trade and tourism like the airport example above.
　　Instead, most of the currency transactions that occur in the global foreign exchange market are bought (and sold) for speculative reasons.
　　Currency traders (also known as currency speculators) buy currencies hoping that they will be able to sell them at a higher price in the future.
　　Compared to the “measly” $22.4 billion per day volume of the New York Stock Exchange (NYSE), the foreign exchange market looks absolutely ginormous with its $6.6 TRILLION a day trade volume.
　　Thats trillion with a “t”.
　　Lets take a moment to put this into perspective using monsters…
　　The largest stock market in the world, the New York Stock Exchange (NYSE), trades a volume of about $22.4 billion each day. If we used a monster to represent the NYSE, it would look like this…
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　　Looks intimidating. Looks like it works out. Some may even find it sexy.
　　You hear about the NYSE in the news every day… on CNBC… on Bloomberg…on BBC… heck, you even probably hear about it at your local gym. “The NYSE is up today, blah, blah”.
　　When people talk about the “market”, they usually mean the stock market. So the NYSE sounds big, its loud and likes to make a lot of noise.
　　But if you actually compare it to the forex market, it would look like this…
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　　Oooh, the NYSE looks so puny compared to the forex market! It doesnt stand a chance!
　　Makes you wonder if the “S” in NYSE stands for “Stock” or for “Scrawny”？
　　Check out the graph of the average daily trading volume for the forex market, New York Stock Exchange, Tokyo Stock Exchange, and London Stock Exchange:
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　　The currency market is over 200 times BIGGER! It is HUGE! But hold your horses, theres a catch!
　　That huge $6.6 trillion number covers the entire global foreign exchange market, BUT the “spot” market, which is the part of the currency market thats relevant to most forex traders is smaller at $2 trillion per day.
　　And then, if you just want to count the daily trading volume from retail traders (that‘s us), it’s even smaller.
　　It is very difficult to determine the exact size of the retail segment of the FX market, but its estimated to be around 3-5% of overall daily FX trading volumes, or around $200-300 billion (probably less).
　　So you see, the forex market is definitely huge, but not as huge as the others would like you to believe.
　　Don‘t believe the “forex is a $6.6 trillion market” hype! The huge number sounds impressive, but a bit misleading. We don’t like to exaggerate. We just keepin it real.
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　　Aside from its size, the market also rarely closes! Its open virtually round the clock.
　　The forex market is open 24 hours a day and 5 days a week, only closing down during the weekend. (What a bunch of slackers!)
　　So unlike the stock or bond markets, the forex market does NOT close at the end of each business day.
　　Instead, trading just shifts to different financial centers around the world.
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　　The day starts when traders wake up in Auckland/Wellington, then moves to Sydney, Singapore, Hong Kong, Tokyo, Frankfurt, London, and finally, New York, before trading starts all over again in New Zealand!
　　To help you know what‘s happening in the forex market every day, we provide an FX Market Snapshot tool. It’s a visual guide that summarizes current market activity, allowing traders to quickly see and understand which major currencies are strong or volatile, and which currency pairs have gained or lost the most.
　　In the next section, well reveal WHAT exactly is traded in the forex market.[/size][/size]