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Quite Simply, it's the global financial market that allows one to trade currencies, if you think one currency will be stronger versus the other, and you end up correct , then you can make a profit.
Once upon a time, before a global pandemic happened, people could actually get on airplanes and travel internationally.
If you've ever traveled to another country, you usually had to find a currency exchange booth at the airport, and then exchange the money you have in your wallet into the currency of the country you are visiting.
You go up to the counter and notice a screen displaying different exchange rates for different currencies.
An exchange rate is the relative price of two currencies from two different countries.
You find 'Japanese yen' and think yourself, 'wow! my one dollar is worth 100 yen?! and i have 10 dollars! I'm going to be rich, when you do this, you essentially participate in the forex market!
You have exchange one currency to another currency or in forex term, assuming that you've an American visiting Japan, you've sold dollar and bought yen.
Before you fly back home, you stop by the currency exchange booth to exchange the yen that you miraculously have remaining (Tokyo is expensive) and notice the exchange rates have changed.
It's these changes in the exchange rates that allow you to make money in the foreign exchange market.
The foreign exchange market, which is usually known as forex or fx is the largest financial market in the world.
The fx market is a global, decentralized market where the world currencies change hands. Exchange rates change for the second so the market is constantly in flux.
Only a tiny percentage of currency transactions happen in the real economy" involving Interational trade and tourism like in the airport example above,Instead most of the currency transaction that occur in the global foreign exchange market are bought (and sold) for speculative reasons.
Compared to the "measlt $22.4 billion per day volume of the New York Exchange (NYSE), the foregin exchange market looks absolutely ginormous with its $6.6 trillion a day trade volume
The currency market is over 200 times bigger it is huge but holds you horses, these a crash! That huge $6.6 trillion number covers the entire global foreign exchange market,but the spot market, which is the part of the currency market thats relevent to the most forex traders is smaller at $2 trillion per day.
If you just want to count the daily traing volume from retail traders , it's even smaller it is very difficult to determine the exact size of the retail segment of the FX marketbut its estimated to be around 3-5% of overall daily FX trading volume,or around $200-300 billion (probably less). so you see the forex is a $6.6 trillion market hype! the huge number sounds impressive,but a bit misleading. we don't like to exaggerate.we jus keepin its real.
The forex market is open 24/5 and 5 days a week only closing down during the weekends so unlike the stock or bond markets,the forex market does not close at the end of each business day.
The Day starts when traders wake up , then moves to sydney, singapore , Honghong , tokyo , london , newyork , before trading starts all over again in new zealand !
In the next section , we'll reveal what exactly is traded in forex market !!!!
