What is traded in the forex market.

What is traded on the Foreign Exchange?

The simple answer is money. Forex trading is the simultaneous buying of one currency and

the selling of another. Currencies are traded through a broker or dealer, and are traded in

pairs; for example the Euro dollar and the US dollar (EUR/USD) or the British pound and

the Japanese Yen (GBP/JPY).

Because you're not buying anything physical, this kind of trading can be confusing. Think

of buying a currency as buying a share in a particular country. When you buy, say,

Japanese Yen, you are in effect buying a share in the Japanese economy, as the price of

the currency is a direct reflection of what the market thinks about the current and future

health of the Japanese economy.

In general, the exchange rate of a currency versus other currencies is a reflection of the

condition of that country's economy, compared to the other countries' economies.

Unlike other financial markets like the New York Stock Exchange, the Forex spot market

has neither a physical location nor a central exchange. The Forex market is considered an

Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run

electronically, within a network of banks, continuously over a 24-hour period.

Until the late 1990’s, only the “big guys” could play this game. The initial requirement was

that you could trade only if you had about ten to fifty million bucks to start with! Forex

was originally intended to be used by bankers and large institutions - and not by us “little

guys”. However, because of the rise of the Internet, online Forex trading firms are now

able to offer trading accounts to 'retail' traders like us.

All you need to get started is a computer, a high-speed Internet connection, and the

information contained within this site.