What is Forex?

Foreign exchange (also known as forex or FX) refers to the global, over-the-counter market (OTC) where traders, investors, institutions and banks, exchange, speculate on, buy and sell world currencies.

Trading is conducted over the ‘interbank market’, an online channel through which currencies are traded 24 hours a day, five days a week. Forex is one of the largest financial markets, with an estimated global daily turnover of more than US$5 trillion. It is the only market which remains active 24 hours a day 5 days a week.

The foreign exchange market is where currencies are traded. Currencies are important to most people around the world, whether they realize it or not, because currencies need to be exchanged in order to conduct foreign trade and business. If you are living in the U.S. and want to buy cheese from France, either you or the company that you buy the cheese from has to pay the French for the cheese in euros (EUR). This means that the U.S. importer would have to exchange the equivalent value of U.S. dollars (USD) into euros. The same goes for traveling. A French tourist in Egypt can’t pay in euros to see the pyramids because it’s not the locally accepted currency. As such, the tourist has to exchange the euros for the local currency, in this case the Egyptian pound, at the current exchange rate.

One unique aspect of this international market is that there is no central marketplace for foreign exchange. Rather, currency trading is conducted electronically over-the-counter (OTC), which means that all transactions occur via computer networks between traders around the world, rather than on one centralized exchange. 

History of Forex Markets

Unlike stock markets, which can trace their roots back centuries, the forex market as we understand it today is a truly new market. Of course, in its most basic sense—that of people converting one currency to another for financial advantage—forex has been around since nations began minting currencies. But the modern forex markets are a modern invention. After the accord at Bretton Woods in 1971, more major currencies were allowed to float freely against one another. The values of individual currencies vary, which has given rise to the need for foreign exchange services and trade.

Conclusion

To Sum it up Forex is nothing but buying of one currency in exchange of another currency in the hope that the currency price will change as per our desire and give us profit. This decision of buying or selling in forex market should be based on thorough research and knowledge about the forex market and the world events as a whole. Remember one thing, this is not an easy way to get rich. In the forex market 90% of traders lose money and only 10% make profit. So the 10% who make money actually takes home the money of all 90% people who lose.

So our aim should be to be in this elite 10%.

Remember, earning money is not easy. If it was easy everyone would be doing it and their would not be a single poor man in this whole world.

About My Experience

I have been trading actively in Forex and stock markets for 10 years now. In my initial years, I did the same mistake as everyone else and lost a lot of money. Sometimes i got so disheartened that I thought of quitting. But slowly I learnt the tricks of this game. Also I learnt how to control my emotions and greed.

Now I can say that i can generate some consistent profits from the market.

In my next blog I will share with you some of the key points which everyone should follow to become successful and consistent in the market.

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