Forex

Written by Sandeep Nehra

• What is Forex?

Forex can be expanded as foreign exchange or in short called FX. Forex is considered as the largest financial market in the world at present and continuously growing. In a forex trade, you will buy one of the currencies while selling another simultaneously or you can say trade is always in pair for example like the Euro-US Dollar (EUR/USD) or US Dollar / Japanese Yen (USD/JPY). Forex trading is used to speculate on the relative strength of one currency against another. The foreign exchange market is an over-the-counter market, which means that it is a decentralized market with no central exchange. Forex is significantly different from equity markets, such as the stock market, or fixed income products, such as bonds. The process of trading Forex may be similar to other markets, but its structure is unique.

• Who trades currencies, and why?

Daily turnover in the world’s currencies comes from two sources:
Foreign trade (5%). Companies buy and sell products in foreign countries, plus convert profits from foreign sales into domestic currency.
Speculation for profit (95%).
Most traders focus on the biggest, most liquid currency pairs, known as “The Majors”. These include US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. In fact, more than 85% of daily forex trading happens in the major currency pairs.
The world’s most traded market, open 24 hours a day. With average daily turnover of US$3.2 trillion, forex is the most traded market in the world.
A true 24-hour market from Sunday 5 PM ET to Friday 5 PM ET, forex trading begins in Sydney, and moves around the globe as the business day begins, first to Tokyo, London, and New York. Unlike other financial markets, investors can respond immediately to currency fluctuations, whenever they occur – day or night.

• Most popular currencies

Symbol     Country                Currency              Nickname

USD       United States              Dollar                       Buck

EUR        Euro members          Euro                         Fiber

JPY      Japan                            Yen                           Yen

GBP       Great Britain                 Pound                    Cable

CHF        Switzerland                  Franc                   Swissy

CAD       Canada                            Dollar                  Loonie

AUD       Australia                       Dollar                 Aussie

NZD       New Zealand                 Dollar                   Kiwi

• Some popular time zone

Time Zone                   New York                  GMT

Tokyo Open                 7:00 pm                     0:00

Tokyo Close               4:00 am                        9:00

London Open             3:00 am                        8:00

London Close             12:00 pm                   17:00

New York Open         8:00 am                      13:00

New York Close          5:00 pm                  22:00