The foreign currency market (forex, FX, or currency forex market) is actually a worldwide, decentralised, over-the-counter financial market for trading currencies. It will be the largest financial market on earth with a number of over $1.5 trillion every day worldwide*. Total volume analysis volume is well over 3 times the entire of your stocks and futures markets combined.
With Pepperstone, you will get direct access to the forex ‘spot’ market – a market that deals in the current cost of a financial instrument.
Traditionally, retail investors’ only means of accessing the foreign exchange market was through banks that transacted huge amounts of currencies for commercial and investment purposes. Trading volume has risen rapidly with time, especially after exchange rates were permitted 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 foreign exchange market to pay for services and goods, transact in financial assets or to reduce the danger of currency movements by hedging their exposure in other markets.
There is absolutely no central marketplace for forex; trade is carried out non-prescription. The foreign currency market is open 24 hours a day, five days per week and currencies are traded worldwide among the major financial centers of London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.
Within the forex market there is very little or no ‘inside information’. Exchange rate fluctuations tend to be brought on by actual monetary flows as well as anticipations on global macroeconomic conditions. Significant news is released publicly so, at least theoretically, everyone in the world receives exactly the same news simultaneously.
Large corporations trade on the FX market to regulate revenues and expenses incurred in several currencies through hedging whereby a trade or multiple trades are opened so that you can make an attempt to minimize in the losses in other trades.
Investors trade currencies to make money. Most forex trading is speculative by analyzing market and political news (fundamental analysis) or studying the chart reputation of an instrument (technical analysis). Unlike other asset markets, in forex it is easy to make money from a currency losing value since it is through the currency rising in value.