The foreign currency market (forex, FX, or currency market) can be a worldwide, decentralised, over the counter financial niche for trading currencies. This is the largest financial market worldwide having a level of over $1.5 trillion a day worldwide*. Total read more volume is more than three times the whole of the stocks and futures markets combined.
With Pepperstone, you will have direct accessibility forex ‘spot’ market – a market that deals in the present cost of a financial instrument.
Traditionally, retail investors’ only method of accessing the foreign exchange market was through banks that transacted considerable 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 FOREX market to pay for services and goods, transact in financial assets or perhaps to reduce the potential risk of currency movements by hedging their exposure in other markets.
There is not any central marketplace for currency exchange; trade is conducted over the counter. The forex market is open 24 / 7, five days a week and currencies are traded worldwide one of the major financial centers of London, New York City, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.
Within the foreign exchange market there is very little or no ‘inside information’. Exchange rate fluctuations are usually caused by actual monetary flows along with anticipations on global macroeconomic conditions. Significant news is released publicly so, no less than in theory, everyone in the world receives exactly the same news as well.
Large corporations trade in the FX market to control revenues and expenses incurred in various currencies through hedging whereby a trade or multiple trades are opened as a way to attempt to minimize in the losses in other trades.
Investors trade currencies for profit. Most fx trading is speculative by analyzing market and political news (fundamental analysis) or studying the chart reputation of an instrument (technical analysis). Unlike other asset markets, in forex it is possible to cash in on a currency losing value because it is from your currency rising in value.