What is FX Trading?

Learn Foreign Exchange Trading In basic terms

Foreign Exchange ('forex' or 'FX') is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).

For speculators, the best trading opportunities exist with the most commonly traded (and therefore most liquid) currencies, called "the majors." Today, more than 85% of all daily transactions involve trading of the majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.

A true 24-hour market, forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial centre, first to Tokyo then London and finally New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

The FX market is considered an 'over the counter' (OTC) or 'Interbank' market, due to the fact that transactions are conducted between two counterparties over the telephone or via an electronic network. Trading is not centralised on an exchange, unlike the equities, futures and options markets.

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