Unlike stocks or commodities, forex trading takes place directly between two parties in an over-the-counter (OTC) market rather than on exchanges. The forex market is managed by a global network of banks based in 4 key forex trading hubs in different time zones: London, New York, Sydney, and Tokyo. As there is no central location, you can trade forex 24 hours a day, seven days a week.
Forex Trading
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What is Forex Trading?
Forex trading, also known as foreign exchange or FX trading is the exchange of one currency with another. It is one of the world’s most active trading markets. The Forex market is the most liquid market in the globe, which means that there are always a large number of buyers and sellers looking to make a trade. Individuals, businesses, and banks convert over $5 trillion in currency every day, with the vast majority of this activity aimed at profit.
Different types of Forex trading:
Spot Forex Market
Financial instruments such as commodities, currencies, and securities are traded on the spot market for immediate delivery. The exchange of cash for the financial instrument is known as delivery.
Forward Forex Market
A forward market is an over-the-counter market that determines the price of a financial instrument or asset for delivery in the future. Forward markets can be used to trade a variety of instruments, but the term is most commonly associated with the foreign exchange market. It can also be applied to securities and interest rate markets, as well as commodity markets.
Future Forex Market
These are standardized futures contracts that allow you to buy or sell currency at a specific date, time, and size. These contracts are traded on one of the world’s numerous futures exchanges.