Forex Trading or Currency Trading refers to a market where people can trade all the currencies of the world. It is currently considered to be one of the largest markets and is also considered to be highly volatile. The amount of money traded in this market easily exceeds more than $5 trillion per day. Even if you combine the stock markets in all the countries of the world, the amount can nowhere match that of the Forex Trading Forum. Forex Trading is a regular profession for many people and presents exciting opportunities to earn money.
Forex transactions are based on the exchange rates which keep fluctuating throughout the day. Directly or indirectly everyone trades in currencies because whenever you travel overseas or you choose to buy a product from the foreign country you pay according to the currency of the country where you are travelling to or buying a product from.
A person who is involved in stock broking or has any knowledge of the share market can easily understand the Forex market as well. One holds a currency until its value increases in the international market just like shares. Once the value of a currency increases, he sells a certain amount from which he can make profits. This is just a rough idea of how a Forex market works. The big difference in the forex market which sets it apart from the stock market is that you can trade up or down very easily. As the market is huge, finding a buyer or seller is not very difficult unlike the stock markets.
Euros and US Dollars are the two most traded currency pairs in the world today. When you click buy in the online Forex markets, you will either buy any one of these currencies. There are usually three ways in which institutions, corporations and individuals trade in the Forex market. These are the spot market, forwards market and futures market. Spot market is always considered the largest market because it deals with the real assets that the other two markets are based upon. Spot market is the place where currencies are either bought or sold according to day to day prices. The prices in this market fluctuate based on the economic conditions of countries, interest rates and political situations that exist in the countries
The forwards and futures market do not deal with actual currencies. Contracts which represent a particular currency type are drawn and sold in these markets. In the forwards market, contracts are sold over the counter between two parties.