The Foreign Exchange Market, abbreviated to Forex (or FX), simply put is the global market place where you can buy and sell currency.
The Forex market vastly overshadows the stock market, as forex trading measure up to 5 trillion USD a day.
FX brokers give access to all three major FX markets (New York, London and Tokyo) where almost all currency pairs are traded. Therefore, currencies can be traded 24 hours during the weekdays.
Unless a major event such as ‘Brexit’ comes around, prices of a currency moves very slowly. A currency may move about 0.0010 – 0.0030 in value on a normal day.
Due to the stability of a currency, Forex trade almost always uses the power of leverage. Leverage means that a smaller amount of money is set forth to trade a large sum of money.
FX commissions come through the bid and offer spread (discussed later) which results in a varying commission fee rather than the flat commissions.
The buyer gives money to the buyer and the seller gives money of a different currency to the buyer. Therefore, every FX transaction happens as a currency pair.
Due to the dual nature of the currency pair, if a FX trader wants to buy the base pair using the quote currency, they can sell the currency pair instead of buying it.
There can always be a discrepancy between what the seller is willing to sell for and what the buyer is willing to pay for it.
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