Forex, or FX, is a term that refers to the Foreign Exchange , a market in which currencies are traded internationally. This is an interbank market, which was created in 1971 when the international trade increased rate regime of fixed exchange regime of floating exchange rates. Because of its volume and liquidity, the FX market has become the largest financial market and the largest in the world.
Here are the key features that are responsible for its success:
- The Forex market operates 24 hours a day.
- High liquidity: the daily FX market volume – more than 4000 billion dollars – allows instant trading on most currencies.
- You can enjoy the rising or falling of markets.
- You get leveraged trading with low margin requirements.
- You have the standard tools to help you control your risk exposure.
- Full transparency: Forex Market is transparent … simply keep you informed.
The Exchange Rate
Forex plays an indispensable role of determining international exchange rates of currencies. The exchange rate is the number of units of domestic currency must be exchanged to acquire one unit of another currency.
An exchange rate between two currencies is determined by the interaction of official and private players in the Forex market.