Forex – Forieng Exchange Market – Details
Each country has its own currency. A concurrent exchange of one country’s currency for that of another is termed as FOREX or Foreign Exchange and can be represented with FX. Sometimes Forex is referred as Retail FOREX also.
FOREX is a platform for individuals, banks or institutions who wish to speculate on the exchange rate between two currencies. In foreign exchange trade, speculators buy or sell one currency for another to make a considerable gain when the value of the currencies changes on the side of the speculator as a result of fluctuations that occurs across the globe These currency fluctuations may occur because of the economic, social and political events.
The central rationale of the foreign exchange market is to help international trade and investments. A foreign exchange market helps businesses to convert one currency to another. For example, it permits an INDIAN business to import US goods and pay US Dollars even though the business’s income is in Indian Rupees.
FOREX is the largest of liquid financial markets in the world operating on 24/5 per week. In fact five and half days a week. The world’s currencies are on a floating exchange rate and are always traded in pairs, for example EUR/USD or USD/JPY. The first currency quoted in a currency pair on FOREX is termed as BASE currency or PRIMARY Currency. And the second currency is called QUOTE currency.
For Example In the EUR/USD currency pair, the EUR is considered as base currency and the USD is the quote currency. There is no central marketplace for currency exchange, rather, trade is conducted over-the-counter.
In today’s global market gains from foreign exchange trading have been an important source of profits for the large commercial banks, financial institutions and even for individuals