AN INTRODUCTION TO FOREX
The foreign exchange market or forex is the largest financial market in the world. It is where the monetary currencies of countries are traded. This transaction between nations is integral for foreign trades and businesses to be conducted. Currency conversion allows for international commerce and investments to occur in order for companies and organizations to be able carry out their jobs. For example, a European company needs to export cars to America. Even though the Americans will buy the car in terms of dollars, the European company will still get paid in euros.
This market is open 24 hours for five and a half days excluding weekends. This means that the foreign exchange market is open at a different times in each time-zone which includes the major cities of Tokyo, New York, London, Sydney, and Paris.
What differentiates forex from the other markets such as the stock market and the bond market is that it caters to bigger players such as international and government banks. It also has geographical dispersion which means that it has no one, central place of business but instead is an over-the-counter electronic transaction using computer networks that conduct all the exchange between traders from anywhere around the world. Forex also has high liquidity due to its large trading volume.
The foreign exchange market is pivotal in the daily lives of the ordinary citizen even if he isn't aware of how he is affected. Forex indicates the value of your money depending on how it matches up with one of the base currency's, like the dollar, due to the factors that affect the exchange rate. It is essential for nations to be able to function together.
In today’s modern world, technology keeps changing the way we live, making everything faster and more efficient. Forex is not exempted from the improvements because of technology. Dealing and exchanging currencies are now more accessible opening up doors for more people to jump in and start managing their own wealth at a click of a button in the comforts of their own home as computers and smartphones begin dominating the world. Prior to these advancements, Forex was initially the territory of big companies, the government, and any institution who possess copious amounts of wealth. Today, everyone has the power to access and participate in the trade through the use of the internet where they can open accounts and immediately begin trading.