Is the forex market the biggest?
Forex market is the largest financial market in the world, In 2022 That’s a turnover of almost US$6.6 trillion per day, what’s happened basically in the last 30 years.
The growth has been pretty explosive and it’s growing each and every year as well certainly dwarfing any other markets the next nearest market is indeed the stock market which doesn’t even come close.
What is meant by the forex market?
Forex trading is the buying of one currency and selling of another currency now if you think a particular economy is going to do well in the future or in the next hour or whatever it is and you might think that currency will do well.
Then you buy that currency, when you’re buying a currency you’re exchanging it for another currency so you may be picking a currency that isn’t looking so positive in terms of its economy and its outlook.
So the forex market is buying one currency and selling another unlike if you’re buying stocks, you’re basically buying one entity, Forex has two transactions going on at any one time.
How foreign exchange market works with Forex trading example
Now the chances are you’re already traded the forex market without even knowing it now imagine you want to go on holiday which I’m sure if you do, you change up your currency if you’re going overseas to the currency in which you are traveling to.
Suppose I live here in the UK if I want to go to the big apple in the USA I’ve got to change my pounds for us dollars to facilitate my whole day my spending so here I am in the UK but I want to take 1000 pounds with me on holiday.
So I go to the Bureau of change you see them there at the airport all the prices on the board flicking away they’re changing instantly throughout the trading day.
They’re trading changing five days a week 24 hours a day these prices are flickering and changing the moment I’m changing up and I see the exchange rate on the board its 1.3 so my 1000 pounds buy 1300 dollars.
Now let’s assume that the holiday doesn’t take place, there’s a global pandemic and flights have been canceled I’m sitting here with these dollars in the UK I’ve got nothing to do with them can’t spend them here in the UK.
I’ve got to change them back into pounds so I can carry on spending my money and now the exchange rate had changed.
Let’s assume the exchange rate has changed from 1.3 to 1.2, Exchange rates are changing as we say all the time on the money markets so now my 1300$ that I’m owning
I’ve got to buy pounds back and I buy them back at the prevailing exchange rate of 1.2 so if I divide 1300 by 1.2 I get 1083 pounds.
So I have made an 83-pound profit for doing absolutely nothing purely because the exchange rate has shifted
From 1.3 to 1.2 that’s the basics behind a foreign exchange transaction slight difference when we’re coming to trading it that is the basic premise behind forex.
What is the Average daily trading volume of the forex market?
|Forex Market||$5.00 trillion|
|New York Stock Exchange||$22.4 billion|
|Tokyo Stock Exchange||$18.9 billion|
|London Stock Exchange||$7.2 billion|
The top 5 traded currencies in the forex market
|United States dollar||US$||88.3%|
|Japanese yen||円 / ¥||16.8%|
Frequently Asked Questions
1) Best currency pairs to trade for Beginners 2022?
EUR/USD is the best pair for beginners in 2022 Because it is the most stable currency pair to trade.
2) How many currency pairs should a beginner trade in 2022?
The best approach is to trade only in one pair because Initially you should focus more on learning and take less trade to protect your capital.
3) How much money is in the Forex market in 2022?
In 2022 The turnover of the forex market is almost US$6.6 trillion per day and it’s growing each and every year as well
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