What is FOREX ?

The Foreign Exchange market, also referred to as the "FOREX" or "Forex" or "Retail forex"

or "Spot FX" or just "Spot" is the largest financial market in the world, with a volume of

about $3 trillion a day. If you compare that to the $25 billion a day volume that the New

York Stock Exchange trades, you can easily see how enormous the Foreign Exchange really

is. It actually equates to more than three times the total amount of the stocks and futures

markets combined! Forex rocks!

What is traded on the Foreign Exchange?

The simple answer is money. Forex trading is the simultaneous buying of one currency and

the selling of another. Currencies are traded through a broker or dealer, and are traded in

pairs; for example the Euro dollar and the US dollar (EUR/USD) or the British pound and

the Japanese Yen (GBP/JPY).

Because you're not buying anything physical, this kind of trading can be confusing. Think of

buying a currency as buying a share in a particular country. When you buy, say, Japanese

Yen, you are in effect buying a share in the Japanese economy, as the price of the currency

is a direct reflection of what the market thinks about the current and future health of the

Japanese economy.

In general, the exchange rate of a currency versus other currencies is a reflection of

the condition of that country's economy, compared to the other countries' economies.

Unlike other financial markets like the New York Stock Exchange, the Forex spot market

has neither a physical location nor a central exchange. The Forex market is considered an

Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run

electronically, within a network of banks, continuously over a 24-hour period.

Until the late 1990 only the a big guys could play this game. The initial requirement was

that you could trade only if you had about ten to fifty million bucks to start with! Forex was

originally intended to be used by bankers and large institutions - and not by us as a little

guy. However, because of the rise of the Internet, online Forex trading firms are now able to

offer trading accounts to 'retail' traders like us.

All you need to get started is a computer, a high-speed Internet connection, and the information

contained within this site.

This e-book was created to introduce novice or beginner traders to all the essential aspects

of foreign exchange, in a fun and easy-to-understand manner.

What is a Spot Market?

A spot market is any market that deals in the current price of a financial instrument.