✔What is the Forex Market✍️ Foreign Exchange Market € Currency Market :Did you ever visit a foreign country? If yes, then when you arrive at anairport, you will find a booth for currency exchange. For example, if an Indiantourist visits the United States of America (USA), then at the airport, youwill be asked to exchange Indian rupees (INR) to the US dollar ($). If theIndian tourist is carrying 1000 INR (Indian Rupees), it will be converted to12.9155 USD in the currency exchange booth, which is equivalent to 1000.15Indian Rupees. It means that the tourist has already made a profit. Whileexchanging the currency in the airport, you will find a screen which displaysthe exchange rates of different countries' currencies. Have you ever found one?Comment below!
If the same tourist carries 500 USD to India, then the tourist is earninga profit of 38,730 Indian Rupees, which is a huge amount. Thanks to thecurrency exchange, Indians are becoming rich by earning US dollars.
✔What isthe Forex market (FX)? |what is the foreign exchange market ?
The process of exchanging one country’s currency in relation to anothercountry’s currency is referred to as the Forex Market (FX). In simple terms,the Forex market (FX) is also called foreign currency trading or currencyexchange market, which allows the global financial market to trade currenciesof different countries.
In the real economy, the above airport scene is just an example, butcurrency exchange is a massive market. Several countries from differentgeo-graphical locations take part in currency trading. It works 5 days a week,functions 24-hours non-stop and exchanges $6.6 trillion dollars of money in aday.
✷What is the FXmarket exchange rate?what is a foreign exchange market?
Previously, I have spoken about the exchange rate! What does it mean? Itis defined as comparing the currency prices of two different countries at thesame time. The changes in the exchange rates of the two different countries'currencies allow you to earn money in the foreign currency market.
However, the Forex market does not have any physical location; it is aglobal, decentralized market where the currencies of different countries areexchanged.
But, since the currency exchange rates change every second, it can createtension among global traders. However, the basic duty of Forex market tradersis to buy and sell currencies of different countries in order to make a profit.
In simple terms, the traders buy the currency of a particular countrywhen it is at a low rate and sell the same currency when it acquires a highrate in the future. This is how the Forex market (FX) runs in the globalfinancial world.
⍟In comparisonto the NYSE and FX,
Have you ever heard of the NYSE? Of course, you might have heard aboutNYSE on business news channels like Bloomberg, CNBC, or in your local gymsaying that NYSE is up today or low today, etc.
The NYSE stands for the New York Stock Exchange Market; it is the world'slargest stock exchange, with a daily trading volume of approximately $22.4billion USD which is a huge amount, but when you compare it with the Forexmarket, it is a tiny amount. In a day, the Forex market trades $6.6 trilliondollars' worth. Such a big, big, big amount!!!
✰Forex MarketSize
The Forex market’s $6.6 trillion dollar number is collaborative moneyfrom the New York Stock Exchange, Tokyo Stock Exchange, London Stock Exchange,and several stock exchanges from different countries. This comprises the entireglobal foreign exchange market. However, there is a SPOT MARKET that trades a smalleramount (i.e., $2 trillion in a day), which is an integral part of the Forexmarket and is relevant to Forex traders.
In comparison with the spot market, the trading volume in the retailmarket is even smaller. In a day, the retail market trades around $200-300billion USD, contributing to an approximate 3-5% of the trading volume in theFX market.
In detail, you will learn more about the spotmarket in coming blogs.
✣Work Schedulesin the Foreign Exchange Market
The Forex market (FX) is virtually operated; it means it does not haveany offices. Unlike the other stock market companies, the foreign exchange market doesn’t close; it opens for 24 hours a day and 5 days a week and closesonly at the weekends.
Once the trading has ended in one particular country, then it shifts tothe different financial centres in a different country. However, a particularday starts with the traders waking up in Aukland/Wellington, and then shifts toSydney, Singapore, Hong Kong, Tokyo, Frankfurt, London, and finally reaches NewYork prior to the Forex trading starts again in New Zealand.
☞In the next article, we will talk about:In the Forex market (FX), what is actually traded?
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