Forex (Foreign Exchange)
Foreign exchange, commonly known as Forex or FX, is the exchange of one currency for another at an agreed exchange rate on the over-the-counter (OTC) market. It is one of the largest and most liquid financial markets in the world, with an average daily turnover of more than $5 trillion. Forex trading involves buying and selling currencies in pairs, with the aim of profiting from the changing values of the two currencies.
History of Forex
The foreign exchange market has its roots in the Bretton Woods Agreement of 1944, which established the rules for commercial and financial relations among the world’s major industrial states. The agreement set up a system of fixed exchange rates and pegged the value of the U.S. dollar to gold. This system was abandoned in 1971, when the U.S. dollar was allowed to float freely against other currencies. Since then, the foreign exchange market has grown rapidly, and is now the largest financial market in the world.
The foreign exchange market is open 24 hours a day, five days a week, except for holidays. It is made up of a network of banks, brokers, and other financial institutions that trade currencies. The market is highly liquid, with a large number of participants and a wide range of currencies being traded. The market is also highly volatile, with prices changing rapidly in response to news and events.
Comparison Table
| Market | Average Daily Turnover | Number of Participants |
|---|---|---|
| Forex | $5 Trillion | High |
| Stock Market | $200 Billion | Medium |
| Bond Market | $700 Billion | Low |
Summary
Forex is the largest and most liquid financial market in the world, with an average daily turnover of more than $5 trillion. It is made up of a network of banks, brokers, and other financial institutions that trade currencies. The market is highly volatile, with prices changing rapidly in response to news and events. For more information about Forex, you can visit websites such as Investopedia, FXCM, and Forex.com.
See Also
- Currency Trading
- Currency Pair
- Exchange Rate
- Currency Market
- Currency Exchange
- Forex Trading
- Forex Broker
- Forex Market
- Forex Signal
- Forex Robot
