WHAT IS FOREX?

The currency market, or more specifically the forex market, derives its
name from the generic term foreign exchange market. The forex market is
a decentralized global network of trading partners, including banks, public
and private institutions, retail dealers, speculators, and central banks involved
in the business of buying and selling money. The forex market is a

spot market, which means that it trades at the current market price as determined
by supply and demand within the marketplace. This differs from
currency futures traded on the commodity exchange in the United States,which trades a contract price for delivery in the future. In the spot market
you are trading cash for cash at the current market price.
The forex market is the largest, fastest-growing financial marketplace
in the world. Every trading day the forex market handles a transaction
volume of nearly $3.2 trillion, according to a survey done by the Triennial
Central Bank in 2007. To put that figure in perspective, the average daily
volume on the forex market is nearly 20 times larger than on the New York
Stock Exchange. The need for foreign exchange is driven by travelers,
multinational corporations, and governments. Tourists from the United
States need euros for their European vacations; corporations such as
Microsoft exchange profits made overseas into U.S. dollars. Governments
hold reserve currencies and manipulate the money supply while they
implement their monetary policies. The forex market was created to
facilitate the sale of currency to customers who intend to take delivery of
the currency; however, the vast majority of trading is done by speculators
seeking nothing more than profit.