Also known as FX or currency market – place where currencies are being traded for set price. It is decentralized market where global currencies trade “over the counter” (OTC). It means that trading is not happening under control of stock market and trades are fast and cheap.
Forex never sleeps
Forex trading creates possibility for speculations around moving of currency prices while buying 1 currency for another. Currency values are increasing against each other (recovering) and decreasing (depreciation), due to economical, geopolitical and technical factors.
Forex is global market, which is open 24 hours/day for 5 days/week (Monday to Friday). Market is opening at the same time as sun rises in Welington on New Zeland, continues by Asian markets in Tokyo and Singapore. Then it follows to London, ending the way closing by evening at New York.
Even if market stays closed during weekend, any macro economical or geopolitical event which happened during weekend will be affecting pricing of currencies on Monday during opening market again.
Forex is biggest market in the world averaging more than 5 million dollars/day in turnover. It is very rare to see 2 currencies having same value in a long term horizon.
How to trade on FOREX?
Exchange rates are constantly changing depending on many factors, for example strength of economics. Forex traders are interested in making profits especially during these price changes during increase or decrease of value of currency pairs.All forex pairs are quoted as one currency against other. First currency is usually marked as “default” and second one as “quoted”. Each currency can get stronger or weaker. Due to fact every pair has 2 currencies, there are 4 possibilities, which are being speculated if we are not talking about forex trading. If you believe that value of first currency will increase over second currency, you will join the purchase position (long). However if believe that value of first currency will decrease over second currency, you will join the selling position (short).
So if you think that USD against JPY will get stronger, you are joining purchasing position on forex pair USD/JPY. You are joining this position as well if you think that JPY will decrease over USD. If you will get a feeling that JYP will increase over USD or USD will decrease over JPY you will join the selling position for USD/JPY.