The Basics of Forex Trading

Carley Garner

 

What Is Forex?

The foreign exchange market; also known as FX, or Forex, is a worldwide, decentralized, over-the-counter financial market that facilitates the trading of currencies between banks, speculators, and investors. Simply put, there is no exchange floor, or even an exchange; instead buyers and sellers are making electronic contractual agreements in regards to underlying currencies. Because there is no exchange, there is also no clearing, or exchange guarantee, and traders are exposed to counterparty risk; this is in contrast to the futures markets, in which an exchange guarantees all executed trades.

The global FX market was created to simplify the transfer of assets between businesses and countries ...