The foreign currency market (forex, FX, or currency forex market) can be a worldwide, decentralised, over the counter financial market for trading currencies. This is the largest financial market on the planet by using a amount of over $1.5 trillion a day worldwide*. Total daytrading site volume is more than three times the whole from the stocks and futures markets combined.
With Pepperstone, you will get direct accessibility forex ‘spot’ market – a market that deals in the present cost of a financial instrument.
Traditionally, retail investors’ only method of accessing the forex trading market was through banks that transacted a lot of currencies for commercial and investment purposes. Trading volume has increased rapidly as time passes, especially after exchange rates were capable 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 currency market to pay for products or services, transact in financial assets or reduce the risk of currency movements by hedging their exposure in other markets.
There is not any central marketplace for foreign exchange; trade is carried out over-the-counter. The foreign exchange market is open twenty-four hours a day, five days a week and currencies are traded worldwide one of the major financial centers of London, The Big Apple, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.
In the foreign exchange market there is very little or no ‘inside information’. Exchange rate fluctuations are usually due to actual monetary flows along with anticipations on global macroeconomic conditions. Significant news is released publicly so, no less than in theory, everyone in the world receives the identical news at the same time.
Large corporations trade on the FX market to regulate revenues and expenses incurred in a variety of currencies through hedging whereby a trade or multiple trades are opened as a way to attempt to minimize on the losses in other trades.
Investors trade currencies to make money. Most currency trading is speculative by analyzing market and political news (fundamental analysis) or studying the chart history of a musical instrument (technical analysis). Unlike other asset markets, in forex it is actually easy to cash in on a currency losing value as it is from the currency rising in value.