What is Forex Market...?

The foreign exchange (forex) market is a global market where one can buy and sell any of the currencies of all countries in the world. The price of one currency will have counter to another currency based on the law of supply and demand. The huge quantity of forex trading transaction carried out every day in a nonstop movement make the forex market one of the most liquid monetary markets in the world.

Based on several research studies, the volume of money traded in the forex market amounts to almost five trillion US dollars per day, You can conduct forex trading from anywhere in the world through both telecommunication networks and the Internet. The stock market operates during the traditional business hours, but in case of forex exchange market it operates 24 hours a day, five days each week.

For better understand how forex transactions are quoted, you just need to remember that a base currency is always quoted as a unit equivalent to the exchange rate of the quote currency. For instance, if you see the quote EUR/USD = 1.3212, it means that the base currency is the EUR, and one unit of EUR is equal to 1.3212 USD (which is the quote currency).

Each forex trading transaction is completed through separate contracts, which are referred to as “lots.” The typical size of one contract or lot is 100,000 units. This signifies that if you acquire one typical sized contract, you will be able to control the base currency with a total quantity of 100,000 units. Each contract is then subdivided into “pips,” which pertains to the minimum price increment. Standard lots or contracts normally have a pip value of $10, but if you are just starting with forex trading, you can try the mini-accounts that some forex companies offer, wherein the lot size can be as low as 10,000 units with pips amounting to just $1 or even less.