Forex, What is it?

Forex is a term that stands for Foreign Exchange. It is sometimes just FX, too. These terms all describe the process of trading the currencies in the world. Unlike the stock market, in the Forex markets, you do not trade ownership in a business. Rather, you are trading the value of money, based on the ups and downs of the currencies of the market. It sounds interesting because it is.

The simple sense of Forex is simultaneous purchase and sale of the currency or the exchange of one country's currency for the one of another country. The world currencies do not have a fixed exchange rate and are always fluctuating, since each are traded in the currency pairs like Euro/Dollar, Dollar/Yen and others. 85% of daily trades are taken by major currencies trading.

The Forex market is the largest market in the world. It is larger than any of the stock markets. Each day, more than three trillion United States dollars trade on the Forex market. This outstanding amount of activity can be a good thing, but it can also be quite worrisome, depending on whom you speak with.

It is important to know that much of the Forex market trading that occurs is speculative trading. It is not just a market based on people changing money hands based on their needs to have another currency. In fact, only a very small portion of Forex trading is in fact from the government or companies out there who need to trade currency for their needs. Most of the trading does not occur for conversion, but for profit of investors.

The Forex market place is a large one. People around the world participate in it. Unlike many other types of markets, the risk levels involved in Forex are easily overcome by the amount of money that can be made in this market place in a single given day. However, it is very important for you to understand the market well before you jump into it. Otherwise, you could lose a great deal of money and your time in the process. Learning about Forex is the first place to start, long before you start putting money into the market.