1. What is forex
Forex (also known as FX and foreign exchange) is the market where one national currency is exchanged for another one. Unlike other financial markets that operate at a centralized location (i.e., the stock exchange), the worldwide Forex market does not have a central location. A transaction in Forex market could be as simple as a tourist buying foreign currency or as complex as a multi-level strategy executed by the bank, involving different currencies and multiple settlement dates.It is a global electronic network of banks, financial institutions and individual Forex traders, all involved in the buying and selling of national currencies. A major feature of the Forex market is that it operates 24 hours a day, 5-6 days a week, corresponding to the opening and closing of financial centers in countries all across the world. At any time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world.
There is no central overseeing body which would oversee or control the forex market. In fact most governments have adopted a free-floating model for their currency, when the currency is not kept on any artificial level (pegged) against another currency, but is allowed to float freely and only the market determines the currency rate. However, that does not mean that currencies are immune from official attempts to influence the rates. From time to time the central bank of a particular country may decide that it is necessary to intervene in the market to achieve certain
goals in the country’s economy or to make sure that the market performs in orderly fashion. Interventions are occasionally seen in practically all currencies and are one of the factors which affect the currency rates.
Forex (also known as FX and foreign exchange) is the market where one national currency is exchanged for another one. Unlike other financial markets that operate at a centralized location (i.e., the stock exchange), the worldwide Forex market does not have a central location. A transaction in Forex market could be as simple as a tourist buying foreign currency or as complex as a multi-level strategy executed by the bank, involving different currencies and multiple settlement dates.It is a global electronic network of banks, financial institutions and individual Forex traders, all involved in the buying and selling of national currencies. A major feature of the Forex market is that it operates 24 hours a day, 5-6 days a week, corresponding to the opening and closing of financial centers in countries all across the world. At any time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world.
There is no central overseeing body which would oversee or control the forex market. In fact most governments have adopted a free-floating model for their currency, when the currency is not kept on any artificial level (pegged) against another currency, but is allowed to float freely and only the market determines the currency rate. However, that does not mean that currencies are immune from official attempts to influence the rates. From time to time the central bank of a particular country may decide that it is necessary to intervene in the market to achieve certain
goals in the country’s economy or to make sure that the market performs in orderly fashion. Interventions are occasionally seen in practically all currencies and are one of the factors which affect the currency rates.
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