How was the Forex market established?
Forex (FOReign EXchange) is a global interbank market that was established in the 70s of the 20th century, when international trade moved from fixed exchange rates to floating ones. The money of the countries-participants of the Forex market ceased to have official gold value. At the same time, the exchange rate of one currency with respect to another one began to be determined solely by the supply and demand of the free market participants, and the constant change in the supply and demand in the market causes the exchange rate to move in one direction or another, which, in fact, benefits the currency trader. Since that time, Forex has become the most dynamic and liquid market. In addition, it is the only market in the world working around the clock.
Where is the Forex market?
Forex does not have any specific trading establishments. This is a network of telecommunicationally interconnected currency dealers dispersed in all the world's leading financial centers, working around the clock. Forex is an interbank or over-the-counter market, since all transactions are concluded between counterparties over the phone or using electronic technologies.
What to sell and purchase in the Forex market?
Any market implies trading in particular products. The main product of the Forex market is the national currencies of different countries. You can trade in almost any currency through brokers. The most liquid currencies are: US dollar (USD), Euro (EUR), Japanese yen (JPY), British pound (GBP), Swiss franc (CHF). In the Forex market, currencies are always traded in pairs. The traditional record of a currency pair is as follows: base currency/quote currency (EUR/USD). Further in the training process, we will consider this issue in more details.
Who trades in the Forex market?
The main participants of the Forex market are as follows:
- Commercial banks;
- Currency exchanges;
- Central banks;
- Companies that carry out foreign trade operations;
- Investment participants;
- Brokerage companies;
- Private individuals;
What is the schedule of the Forex market?
Forex operates 24 hours a day, 5 days a week (except for national holidays).
Traditionally, we highlight three basic sessions (Moscow +4 GTM) in the schedule of the Forex trade sessions:
- Asian trade session: 04:00 – 12:00;
- European trade session: 10:00 – 18:00;
- American trade session: 17:00 – 01:00.
We can also see an additional trade session for Australia and Oceania, which is held in the morning hours: 02:00 - 10:00.