Skip to content
Zhi Finance » FOREX, Foreign Currency Trading

FOREX, Foreign Currency Trading

Foreign exchange trading is about trading foreign exchange, stocks and similar types of products. The currency of one country is weighed against the currency of another country to determine the value. When trading stocks on the FOREX market, the value of that foreign currency is taken into account. Most countries have control over the value of that country, involving the currency, or currencies. Those who regularly participate in the foreign exchange market include banks, large corporations, governments and financial institutions.

What makes the foreign exchange market different from the stock market?

A foreign exchange market transaction is one that involves at least two countries and can take place worldwide. These two countries refer to the investor and the country in which the funds are invested. Most of the transactions that take place in the Forex market are done through brokers, such as banks.

What really constitutes the foreign exchange market?

The Forex market is made up of various transactions and countries. People involved in the foreign exchange market are making a lot of transactions, a lot of money. People involved in the foreign exchange market are generally in the business of cash, or trading in very liquid assets that you can sell and buy quickly. This market is big, very big. You could argue that the foreign exchange market is much larger than the stock market in any country. People involved in the forex market trade twenty-four hours a day, and sometimes trading is done on weekends, but not all weekends.

You may be surprised at the number of people involved in forex trading. In 2004, nearly two trillion dollars was the average daily trading volume. That’s a huge number for a daily trading volume. Think about how much a trillion dollars really is and multiply that by two, that’s how much money changes hands every day! That’s the foreign exchange market.

The Forex market is not new, but has been in use for over 30 years. With the introduction of computers and the Internet, trading in the Forex market continues to grow as more and more people and businesses become aware of the availability of this trading market. Forex trading only accounts for about ten percent of the total volume of transactions between countries, but this number will continue to grow as well as this market becomes more popular.