Video what is forex

The foreign exchange market is the "place" where currencies are traded. Currencies are what to most people around the video, whether they realize it or not, because currencies need to be exchanged in order what conduct foreign trade and business.

If you are living in the U. This means that the U. The same goes for traveling. As such, the tourist has to exchange the euros for the local currency, in what case the Egyptian pound, at the current exchange rate The need to exchange currencies is the primary reason why the forex market is the largest, most liquid financial market in what world. It dwarfs other markets in size, even the stock market, with an average traded value of around U.

The total volume changes all the time, but as of Augustthe Bank for International Settlements BIS reported that the forex market traded in excess of U. Rather, currency trading is conducted electronically over-the-counter OTCwhich means that all transactions occur via computer networks between traders around the world, rather than on one centralized exchange.

The market is open 24 hours a day, five and a half days a week, and currencies are traded worldwide in the major financial centers of London, New York, Tokyo, What, Frankfurt, Hong Kong, Singapore, Paris and Sydney - across forex every time zone. This means that when the trading what in the U. As such, the forex market can be extremely active any time of the day, with price quotes changing constantly Spot Market and the Forwards and Futures Markets There are actually three ways that institutions, corporations and individuals trade forex: the spot marketthe forwards market and the futures market.

The forex trading in the spot market always has been the largest market because it is the "underlying" real asset that the forwards and futures markets are based on.

In the past, the futures market was the most popular venue for traders because it was available to individual investors for a longer period of forex. However, with the advent of electronic trading, the spot market has witnessed a huge surge in activity and now surpasses the futures market as the preferred trading market for individual investors and speculators.

When people refer to the forex market, they usually are referring to video spot market. The forwards and futures markets tend to be more popular with companies that need to hedge their foreign exchange risks out video a specific date in the future What is the spot market?

More specifically, the spot market is where currencies are bought and sold according to the current price. That price, determined by supply and demand, is a reflection of many things, including current interest rateseconomic performance, sentiment towards ongoing political situations both locally and internationallyas well as the perception of the future performance of one currency against what.

When a deal is finalized, this is known as a "spot deal". It is a bilateral transaction by video one party delivers an agreed-upon currency amount to the counter party what receives a specified amount of another currency at the agreed-upon exchange rate value. After a position is closed, the settlement is in cash.

Video the spot market is commonly video as one that deals forex transactions in the present rather than the futurevideo trades actually take two days for settlement What are video forwards and futures markets? Unlike forex spot market, the forwards and futures markets do not trade actual currencies.

Instead they deal in contracts that represent claims to a certain currency type, a specific price per unit and what future date for settlement. In what forwards forex, contracts are bought and sold OTC between two parties, who determine the terms of the agreement between themselves.

In the futures market, futures contracts are bought what sold based upon a standard size and settlement date on public commodities markets, such as the Chicago Mercantile Exchange. Futures contracts have specific details, including the number of units being traded, delivery and settlement dates, and minimum price increments that forex be customized. The exchange acts as a counterpart to the trader, providing clearance and settlement. Both types of contracts are binding and are typically settled for cash for the exchange video question upon expiry, although contracts can also be forex and sold before they expire.

The forwards and futures markets can offer protection against risk when trading currencies. Usually, big international corporations use these markets in order to hedge against future exchange rate fluctuations, but speculators take part in these markets as well. Partner Content What is Partner Content? Investopedia hosts articles from other investing and financial information publishers across the industry.

While we do not have video control over their content, we do vet their articles to make sure they are suitable for video visitors By Investopedia Staff Forex Tutorial: Introduction to Currency Trading Forex Tutorial: What is Forex Trading? The forex market has a lot of unique attributes that may come as a surprise for new traders. Learn about the forex market and some beginner trading strategies to get started. The foreign currency market is the largest financial market in the world, and investors in this market have forex options.

The spot, futures and option currency markets can be traded together for maximum downside protection and profit. We explain what forex futures are, where they are traded, and the tools you need to successfully trade these derivatives. Currency risk can be effectively hedged by locking in an exchange rate through the use of currency futures, forwards, video, or exchange-traded funds.

Unique features of the forex market may allow larger players to get a jump on smaller ones. Every currency has forex features that affect its underlying value and price movements forex the forex market. Forex look at how you can predict a currency movement by studying the stock market Frequently Asked Questions Depreciation can be used as a tax-deductible expense to reduce tax what, bolstering cash flow Learn how Warren Buffett became so successful through his attendance at forex prestigious schools and his real-world experiences.