Foreign Exchange

Foreign exchange (forex) represents the practice of exchanging or converting a specific country’s currency into another country’s currency. A popular example includes the conversion of the Australian dollar (AUD) into US dollars (USD), and/or vice versa.

There are a variety of mediums this can occur over. In its most basic form, the exchange of currencies can be handled over a physical counter, such as in an airport or currency exchange.

This can also take place over the internet through the use of brokerage platforms, which also utilizes speculation or leverage and is known as forex trading.

Overall, the forex market presently is one of the world’s largest trading markets by volume. This includes both retail and institutional traders.

The FX market presently turns over in excess of $5 trillion every day, with the most exchanges occurring between the US dollar and the Euro (EUR/USD), followed by the US dollar and the Japanese yen (USD/JPY), then the US dollar and British pound (GBP/USD), according to the Bank of International Settlements (BIS) latest survey.

Foreign Exchange Trading Now Available to Everyone

Over a period of time, exchanging currencies causes a country’s currency to fluctuate in value in relation to another currency. This is defined as the exchange rate.

Trading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.

However, recent innovations and technology has made normal forex trading now accessible for even normal individuals.

Forex exchange trading is a complicated practice though can be learned easily with the help of many retail brokers.

Most commonly, users can gain valuable practice using demonstration accounts that rely on trading with demo money, before ultimately trading with actual money.