What is Forex?

Forex, which is the short-term for foreign exchange, is the act of buying and selling of one currency to another. As the term implies, Forex is traded in pairs – either with one currency to another or with one currency to a commodity.

Forex is the largest financial market in the world, with a volume of USD5.3 trillion traded daily. This is even larger than largest stock market in the world, New York Stock Exchange, which trades a volume of USD22.4 billion daily.

Unlike stock market or other financial markets, Forex is not traded in a physical exchange; instead it is traded worldwide via an electronic system.

When can you trade Forex?

Forex is traded 24 hours a day, 5 days a week.

Actual open hours and closing hours depend on local business hours of each countries. Also, opening time and closing time may differ by 1 hour for countries that implement Daylight Savings Time during the summer hours.

The following are based on GMT +8 time zone:

  • Oceania/Asia opens at 5 am and closes at 7pm
  • Europe/London opens at 3pm and closes at 12am
  • US opens at 9pm and closes at 5pm

Who Participates in Forex?

  1. Government and central banks
  2. Commercial banks
  3. Businesses that deals with importation and exportation
  4. Hedge funds
  5. Tourists
  6. Retail traders (individual traders)

What Currency Pairs are Traded Most?

  1. Euro/ US Dollar (EUR/USD)
  2. US Dollar/ Japanese Yen (USD/JPY)
  3. Great Britain Pound/ US Dollar (GBP/USD)
  4. US Dollar/ Swiss Franc (USD/CHF)
  5. US Dollar/ Canadian Dollar (USD/CAD)
  6. Australian Dollar/ US Dollar (AUD/USD)
  7. New Zealand Dollar/ US Dollar (NZD/USD)