What exactly is forex? Essentially, it’s the expansive global marketplace where individuals engage in currency trading. If you anticipate that one currency will outperform another and your prediction proves correct, you stand to gain a profit.
Once upon a time, before a global pandemic altered our realities, international travel was a common occurrence. If you've ever journeyed to another country, you likely encountered the need to exchange your currency for the local one.
Remember those exchange booths at the airport? You'd approach the counter and observe fluctuating exchange rates on the display screen.
Prior to departing back home, you'd swing by the exchange booth again to convert any remaining foreign currency, only to notice that the rates had shifted.
So, what exactly is forex?
Well, it's the foreign exchange market, also known as “forex” or “FX,” and it stands as the largest financial market globally. This market operates on a global scale, facilitating the exchange of currencies from around the world. Exchange rates fluctuate constantly, reflecting the dynamic nature of this market. To put its enormity into perspective, consider this: while the New York Stock Exchange (NYSE) boasts a daily trading volume of approximately $200 billion, the forex market dwarfs it with a staggering $6.6 trillion traded daily. Yes, that's trillion with a “t”.
To illustrate the comparison using monsters: the NYSE, with its $200 billion daily volume, might resemble a formidable creature, impressive in its own right. It's talked about in the news, discussed on financial channels, and even brought up in casual conversations. However, when you contrast it with the forex market, it's like comparing a mere creature to a colossal titan.