What Is Forex?
Forex is an abbreviation for FOReign EXchange, which is the process of transferring money internationally between different currencies.
The Forex market is open 24 hours a day, 5 days a week, during which time the rate of each traded currency will fluctuate according to the basic laws of supply and demand. The Forex market assists international trade, as it allows a company in one country to import goods from somebody in a different country, and pay for those goods in the local currency of the exporter. As well as international trading companies, Forex market participants include Central Banks, hedge funds, investment managers and speculative retail traders.
As of the last triennial report produced by the Bank of International Settlements in 2010, average daily global Forex transactions amounted to nearly $4 trillion, which represented a growth of approximately 20% from the previous report 3 years earlier.
It is estimated that between 70% and 90% of all Forex transactions are speculative and, in recent years, currency trading has become increasingly popular amongst retail traders. According to the last BIS report, speculative spot Forex transactions of the type typically executed by retail traders accounted for around 37% of all Forex turnover, representing an increase of 48% from the previous report.