The Foreign Exchange market is generally known as the “Forex” and even the “FX” market. It is the largest financial market in the world. The daily mean transaction of US$1.9 trillion. This is 30 times bigger than the aggregated volume of all U.S. equity markets. And the “Foreign Exchange” is the co occurring buying of one country’s currency and selling of another. In this market, currencies are merchandised in pairs. For example; Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).
Two motives to buy and sell currencies occur in this market. One; about 5% of daily turnover in this market is from companies and governments. They buy or sell products and services in a foreign country or they convert profits made in foreign currencies into their domestic currency. The other; 95% is trading for profit, or speculation only.
For those who risks losses for the possibility of considerable gains; the best trading chances are with the most commonly traded currencies. These are called “the Majors.” Nowadays, more than 85% of all daily dealings necessitate trading of the Majors, which accept the US Dollar, Canadian Dollar, Australian Dollar, Euro, British Pound, Swiss Franc, and Japanese Yen.
As trade is going on 24-hour, Forex marketing begins each day around the Globe, and moves on, as the business day begins in each financial center, depending on their zonal times. Dissimilar to the rest of the financial market; here, Investors react to currency fluctuations caused by economic and political events of their targeted country’s currencies, at the time they occur, either day or night.
The FX market is mooted as an Over The Counter (OTC) or ‘interbank’ market. This is due to the fact that transactions are carried on between two similitude’s over the telephone or via online. Trading is not focused on an exchange, as being traded in the stock and futures markets.