Foreign exchange, forex happens to be the trading of one currency to another. For example, if you are British and if you’re travelling to the United States of America, you will have to exchange GBP to USD. It is trading one currency to another. You can swap USD for any currency. The same way, any currency can be swapped for any other currency that is valid, in the world. Phonics instance actions can actually take place on the foreign exchange markets, which are also called as forex markets. The forex market happens to be one of the largest, most liquid market in the world. It has dealings of trillions of dollars every single day. Yes, you read that right. This market deals with trillions of dollars every single day. Keep in mind that it is not in a centralised location; it is actually a collection of an electronic network of banks, institutions, brokers and even individual traders. It means that it does not have a tangible location. But, it exists, and it is the largest financial market in the world.
The internet has certainly made it possible for transactions like the above. The internet is something that connects us to a lot of people all around the world. Without the internet, the forex market would not be where it is. Foreign exchange trading actually utilises currency pairs, which are priced in terms of one versus another. For example, if you are comparing INR to USD, you would be comparing one USD to INR. Today’s exchange rate is one USD is equal to 74 INR. I am sure at this point; I am sure you get the picture of what exactly I’m talking about.
Let me now tell you about how it works. The market actually determines the value, and it also knows the exchange rates of all the major currencies. Foreign-exchange can also be very simple; it can be the changing of one currency to another, even at a local bank. It can also involve the trading of some currencies on the foreign exchange market. A trader who is betting in a central bank will definitely ease or even tighten the monetary policies that will help strengthen. When one is trading currencies, they are listed in pairs; they are always listed in pairs. For example, it can be USD/CAD, EUR/USD, USD/GBP, INR/USD. CAD would be the Canadian dollar; EUR would be the Euro, and the GBP would be the British Sterling Pound or Great Britain Pound.
If you are someone who is trading in these markets and if you are well-versed, which means that you know what you are doing, you will actually end up making a lot of money, just by trading.