May 17, 2022 - 12:45 PM 678 views
✔What is the Forex Market✍️ Foreign Exchange Market € Currency Market : Did you ever visit a foreign country? If yes, then when you arrive at an
airport, you will find a booth for currency exchange. For example, if an Indian
tourist visits the United States of America (USA), then at the airport, you
will be asked to exchange Indian rupees (INR) to the US dollar ($). If the
Indian tourist is carrying 1000 INR (Indian Rupees), it will be converted to
12.9155 USD in the currency exchange booth, which is equivalent to 1000.15
Indian Rupees. It means that the tourist has already made a profit. While
exchanging the currency in the airport, you will find a screen which displays
the exchange rates of different countries' currencies. Have you ever found one?
If the same tourist carries 500 USD to India, then the tourist is earning a profit of 38,730 Indian Rupees, which is a huge amount. Thanks to the currency exchange, Indians are becoming rich by earning US dollars.
The process of exchanging one country’s currency in relation to another
country’s currency is referred to as the Forex Market (FX). In simple terms,
the Forex market (FX) is also called foreign currency trading or currency
exchange market, which allows the global financial market to trade currencies
of different countries.
In the real economy, the above airport scene is just an example, but
currency exchange is a massive market. Several countries from different
geo-graphical locations take part in currency trading. It works 5 days a week,
functions 24-hours non-stop and exchanges $6.6 trillion dollars of money in a
✷ What is the FX market exchange rate? what is a foreign exchange market?
Previously, I have spoken about the exchange rate! What does it mean? It
is defined as comparing the currency prices of two different countries at the
same time. The changes in the exchange rates of the two different countries'
currencies allow you to earn money in the foreign currency market.
However, the Forex market does not have any physical location; it is a
global, decentralized market where the currencies of different countries are
But, since the currency exchange rates change every second, it can create
tension among global traders. However, the basic duty of Forex market traders
is to buy and sell currencies of different countries in order to make a profit.
In simple terms, the traders buy the currency of a particular country
when it is at a low rate and sell the same currency when it acquires a high
rate in the future. This is how the Forex market (FX) runs in the global
⍟ In comparison
to the NYSE and FX,
Have you ever heard of the NYSE? Of course, you might have heard about
NYSE on business news channels like Bloomberg, CNBC, or in your local gym
saying that NYSE is up today or low today, etc.
The NYSE stands for the New York Stock Exchange Market; it is the world's
largest stock exchange, with a daily trading volume of approximately $22.4
billion USD which is a huge amount, but when you compare it with the Forex
market, it is a tiny amount. In a day, the Forex market trades $6.6 trillion
dollars' worth. Such a big, big, big amount!!!
✰ Forex Market Size
The Forex market’s $6.6 trillion dollar number is collaborative money
from the New York Stock Exchange, Tokyo Stock Exchange, London Stock Exchange,
and several stock exchanges from different countries. This comprises the entire
global foreign exchange market. However, there is a SPOT MARKET that trades a smaller
amount (i.e., $2 trillion in a day), which is an integral part of the Forex
market and is relevant to Forex traders.
In comparison with the spot market, the trading volume in the retail
market is even smaller. In a day, the retail market trades around $200-300
billion USD, contributing to an approximate 3-5% of the trading volume in the
In detail, you will learn more about the spot market in coming blogs.
✣ Work Schedules
in the Foreign Exchange Market
The Forex market (FX) is virtually operated; it means it does not have
any offices. Unlike the other stock market companies, the foreign exchange market doesn’t close; it opens for 24 hours a day and 5 days a week and closes
only at the weekends.
Once the trading has ended in one particular country, then it shifts to
the different financial centres in a different country. However, a particular
day starts with the traders waking up in Aukland/Wellington, and then shifts to
Sydney, Singapore, Hong Kong, Tokyo, Frankfurt, London, and finally reaches New
York prior to the Forex trading starts again in New Zealand.
☞In the next article, we will talk about: In the Forex market (FX), what is actually traded?
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