Forex (FX)

Beginner

Forex (FX) is a contraction of foreign exchange, referring to the global market for buying and selling currencies. The Forex market is indisputably the largest and most liquid financial market in the world, boasting trillions of dollars in trading volume a day.

Participants – ranging from day traders to international banks – set global exchange rates. Naturally, those that have a more substantial impact will be major institutions like commercial banks, which make up the bulk of trading activity. These players interact either directly with one another or through electronic brokers.

As with cryptocurrency markets, participants trade currency pairs (EUR/USD, GBP/CNY, JPY/CHF, AUD/NZD, etc.). The difference here is that they deal exclusively in fiat money such as the British pound, Canadian dollar, or Japanese yen. Another similarity is uptime: while not available 24/7/365 like digital currency markets, Forex is open for 24 hours a day, excluding weekends. 

You could also compare the decentralized nature of both markets. Unlike with stocks, you’re not limited to trading platforms like the New York Stock Exchange (NYSE) or NASDAQ for trading currencies. Exchanges are conducted around the globe without the oversight of a single regulatory body.

Forex, as we know it today, is a relatively recent phenomenon, largely spurred on by the termination of the Bretton Woods system in 1971. This resulted in the decoupling of the US dollar from gold, opening it up to floating exchange rates determined by supply and demand on the foreign exchange market.

Forex trading can be speculative in nature, or it can form part of a hedging strategy. Trades could equally be executed in order to acquire currency to buy assets in another country. Spot markets are where the majority of trades occur. This stands to reason, as derivative products are reliant on this real-time volume to function effectively. To maximize the efficiency of spot trades (and given the very thin margins), traders often opt to use a combination of technical analysis, leverage, and scalping to generate returns.

Futures and forward contracts are popular alternatives to the spot markets. These can be particularly useful for the purposes of hedging. 

Glosarium

A marketplace for cryptocurrencies where users can buy and sell coins.

Definisi lengkap
Glosarium

Money that a government has declared to be legal tender.

Definisi lengkap
Glosarium

A period of strong selling activity, where investors give up their positions and sell their holdings as qui...

Definisi lengkap
Glosarium

A measure used in order to assess the efficiency of an investment. The ratio between net profit and net cost.

Definisi lengkap
Glosarium

A single huge buy order or the composition of multiple large buy orders at the same price in the order book...

Definisi lengkap
Glosarium

A very large limit sell order or a cumulation of sell orders at the same price level on an order book for a...

Definisi lengkap
Glosarium

A marketing strategy used to spread fear and insecurity among customers, traders, or investors.

Definisi lengkap
Glosarium

The feeling of fear and anxiety that you might be missing out on a potentially profitable opportunity.

Definisi lengkap
Glosarium

A technical analysis indicator that measures market volatility. It's made of two sidelong bands and a simpl...

Definisi lengkap
Glosarium

A type of algorithmic trading that involves the execution of a large number of orders in fractions of a sec...

Definisi lengkap
Glosarium

A measurement of the number of individual units of an asset that changed hands in a market during a given t...

Definisi lengkap
Glosarium

Wealthy investors that seek out opportunities to provide funding for entrepreneurs or start-up companies.

Definisi lengkap
Glosarium

A system or method that helps individuals or companies manage assets. Either on behalf of their clients or ...

Definisi lengkap
Glosarium

A bullish chart pattern where a shorter-term moving average crosses above a longer-term moving average.

Definisi lengkap