What is forex?
What is Forex?
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Forex (foreign exchange) is a global marketplace where currencies and derivatives on the currencies are traded, and where fortunes big and small are being made and lost even as you read this. It is also called fx and is the largest, most traded, most liquid and most dynamic financial market in the world, with daily volumes estimated in 2004 at about 2,000,000,000,000 US dollars. It is bigger by the volume than the US stock, futures and treasuries markets combined.
The forex market presents unparalleled opportunities to those with knowledge and experience of how to navigate its murky shark-infested and quite dangerous waters. It does not have direct correlation with stock markets, so currency trading has the potential to be profitable in both bull and bear market conditions.
Foreign exchange products are traded on several different markets (a most of the time, however, you will find the name forex, as it is referred to by the OTC spot market):
1) Forex OTC (over-the-counter) market, which consists of forex spot (also called rolling spot) and forex forward markets.
2) Exchange traded fx futures market. Trading of derivatives on currencies – futures and options futures – conducted on organized exchanges (futures and options are derivatives). At first it can be a little bit confusing due to the fact that some forex derivatives, such as options, are also traded on OTC market.
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