FOREX - Trading of foreign currencies

Filed Under (Forex) by MegaDL on 02-10-2008

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FOREX trading is a financial trading that involves different types of products such as foreign currencies, stocks, and the like. In such type of financial trading, the value of a country’s currency is determined depending on its current exchange rate vis-a-vis another country’s currency to which it is about to be exchanged into. Among the common traders in a FOREX market are large businesses, banks, and other financial institutions. Countries, through their respective governments, may also invest in FOREX. They may invest money in another country through a bank that serves as the broker.


Financially speaking, a FOREX market is much larger than a stock market. Since most of the players are financial institutions, the amount of money that circulates within this market is significantly bigger than that of the stock market. In fact, in 2004, the average amount of money that was transacted daily in FOREX was at about two trillion dollars. Think about that. Trillions of dollars is traded by different hands on a daily basis! Moreover, trading in a FOREX market is non-stop; trading is 24/7 on weekdays with some even done on weekends.

Trading in FOREX market is not a new thing. It has been existing for more than thirty years now. The advent of computers, as well as the Internet, has contributed in the growth of FOREX as many individuals and businesses become aware of the existence of this trading market. Although FOREX trading only constitutes, approximately, ten percent of a country’s total trading, this could increase significantly as FOREX market incessantly grows in popularity.

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