Foreign currency trading is done in the Forex market. Forex is an abbreviation for the Foreign exchange currency market. The Forex market is largest financial market in the world with a volume of 1.5 trillion dollars a day. This is a staggering sum of money traded daily with a daily volume that is 3 times the amount traded on all U.S. markets. The main function of FOREX is to allow the international monetary exchange and the also exchange rate between the worlds currencies.

Several Factors Influencing The Foreign Currency Trading Market…

• The interest rates announced by central banks
• Industrial production, unemployment
• A government’s debt
• Reports by Governments and indexes of purchasing power
• Political events and economic
• Market Assessment made by commentators and the media

In contrast to other financial markets, the foreign currency trading market has no physical location or central exchange. This is a market that is traded via electronic networks. The exchanges take place between banks, businesses or individuals. 95% of all currency trading comes from speculators with only 5% of the currency transactions from governments.

Two Kinds Of Foreign Currency Trading Are Possible…

• Spot FOREX
• Currency Futures

The spot FOREX is the exchange of currencies in real time, 24 hours a day. Spot FOREX allows more liquidity at a cost generally lower. The pairs of currencies traded are listed as the currency against the U.S. dollar or vice versa. For example a trade between the U.S. dollar and the Canadian dollare would look like this: USD/CAD.

The currency futures are traded like currency against the U.S. dollar only. Foreign currency trading is done on a limited time (closes at the end of the day) in non-US currencies, may be subject to certain liquidity shortages and delays in time, as well as higher costs (including those of the NFA or National Futures Association).