The forex trading market (forex, FX, or currency market) is actually a worldwide, decentralised, over-the-counter financial niche for trading currencies. This is the largest financial market worldwide using a amount of over $1.5 trillion every day worldwide*. Total key reversal bars volume is more than 3 times the entire of your stocks and futures markets combined.
With Pepperstone, you will possess direct accessibility forex ‘spot’ market – a market that deals in the present cost of a financial instrument.
Traditionally, retail investors’ only methods of gaining access to the foreign exchange market was through banks that transacted huge amounts of currencies for commercial and investment purposes. Trading volume has risen rapidly with time, especially after exchange rates were able to float freely in 1971. Today, importers and exporters, international portfolio managers, multinational corporations, speculators, day traders, long term holders and hedge funds all use the foreign currency market to purchase products or services, transact in financial assets or perhaps to reduce the risk of currency movements by hedging their exposure in other markets.
There is absolutely no central marketplace for foreign exchange; trade is carried out over-the-counter. The forex market is open 24 hours a day, five days per week and currencies are traded worldwide amongst the major financial centers of London, Ny, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.
Within the foreign currency market there is little or no ‘inside information’. Exchange rate fluctuations tend to be due to actual monetary flows along with anticipations on global macroeconomic conditions. Significant news is released publicly so, a minimum of in theory, everybody in the world receives the same news simultaneously.
Large corporations trade in the FX market to manage revenues and expenses incurred in various currencies through hedging whereby a trade or multiple trades are opened in order to try and minimize in the losses in other trades.
Investors trade currencies for profit. Most forex trading is speculative by analyzing market and political news (fundamental analysis) and/or studying the chart reputation of an instrument (technical analysis). Unlike other asset markets, in forex it is actually possible to cash in on a currency losing value as it is from the currency rising in value.