Foreign exchange or forex market for short is where one of one unit of exchange is traded for another unit of exchange
. Foreign exchange market is a high risk market, but could yield great earnings.
Despite the fact that there is no physical location the meeting together of people for the purpose of trade from one currency to another currency is easily done in the foreign exchange market. It is the largest financial market in the world where every day over two trillion US dollars is exchanged.
The evolution of the Internet has assisted the growth of the foreign exchange market that was previously closed to individual investors who wished to learn forex trading. These interconnected communication lines of computers is what allows the market to be so large. The person who buys and the person who sells can be from any country in the world and can be simultaneously making the same transaction.
The most important members that play in the foreign exchange market are banks that having a relatively great size, governments, multinational corporations, and individuals who buy and sell currencies to profit from fluctuations in the value of those currencies. One person can commit a small amount of money in order to gain a large financial return in the international currency market. This is largely responsible for the flows of money from one country to another and depending on what the interest rates are for certain countries will determine the formation of your forex trading strategies.
One of the greatest benefits of the foreign exchange market is the ease of exchange of one currency to another currency, and greatest degree of the transaction being readily convertible to cash without halting the trading period has put the foreign exchange market in an entirely different category of financial markets.