Wednesday, 18 May 2022
Business

What Is Forex And How Big Is It?

What is Forex? A lot of interested individuals ask this question. They want to know whether this investment is worth the risk or simply want to feed their curiosities. To put it simply, Forex is a global financial market allowing one currency to be traded into another. Thinking that one currency will become stronger than the other and your predictions turn out to be correct, you will be making some profits.

For instance, when travelling from one country to another, you have to change your home currency into the country’s currency where you are visiting. Then, you will utilise it to purchase products and services from that country by exchanging the money. You go to the currency exchange counter and see the screen that displays different rates for each currency. An Exchange Rate refers to two currencies coming from other countries.

Then you see that one dollar can be exchanged for 100 yen. You start to think that you will benefit from it. This is the time that you have participated in the Forex market. You have successfully exchanged one currency for another.

What Is Forex?

The foreign exchange market, also referred to as Forex or simply FX is considered the largest financial market globally. FX is decentralised and not managed by one corporate body and others despite being a global market. There are changes in the exchange rate every second. Therefore, it is important to make the right decision in minutes as much as possible, and that would only be possible if you use trading platforms like MetaTrader 4 (MT4).

There is only a bit of currency transaction happening in the real economy, and this involves tourism and international trade like inside airports. However, most currency transactions in the foreign exchange market are bought or sold due to speculative reasons.

Forex traders buy currencies and hope that they will sell at a higher amount in the future. Forex trading is so diverse that the largest stock market in the world has been trading a volume of $22.4 billion every day. This is the New York Stock Exchange (NYSE). You usually hear NYSE on the news when stocks are concerned. It may sound so large, but it will be so small compared to the Forex market. To put it short, the currency market is more than 200 times bigger than the stocks market. It covers the entire global foreign exchange market, which amounts to $6.6 trillion.

That being said, the Forex market is huge. Entering this huge industry might be too intimidating. Previously, it was dominated by huge financial banks and organisations. However, through online trading and the introduction of trading platforms like MetaTrader 4 (MT4). These trading platforms greatly help increase the number of people interested in trading.

Additionally, trading platforms help minimise the work of every trader, especially because of automated trading. Many valuable tools and indicators are found in trading platforms like MetaTrader 4. You will surely enjoy trading with the use of it.

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