Forex Trading

Welcome to PracticalFX. Let us teach you about the Retail Off Exchange Foreign Currency Market (Forex market) and how to trade it. The Forex market is the largest market in the world, with trades amounting to more than USD 1.9 trillion every day.

Most Forex trading is speculative, with only a few percent of market activity representing governments' and companies' fundamental currency conversion needs.

In contrast with trading on the stock market, the Forex market is not conducted by a central exchange, but on the Interbank market, which is thought of as an OTC (over the counter) market.

Trading takes place directly between the two counterparts necessary to make a trade, whether over the telephone or on electronic networks all over the world.

The main centres for trading are Sydney, Tokyo, London, Frankfurt and New York. This worldwide distribution of trading centres means that the forex market is a 24-hour market 5.5 days a week- open from 21h00 hrs GMT Sunday night to 21h00 Friday night.

Trading Forex

A currency trade is the simultaneous buying of one currency and selling of another one. The currency combination used in the trade is called a cross (for example, the Euro/US Dollar, or the GB Pound/Japanese Yen.). The most commonly traded currencies are the so-called “majors” – EURUSD , USDJPY , USDCHF and GBPUSD .

The spot forex market is known to have the largest volume. The market is called the spot market because trades are settled almost immediately, or “on the spot”. In practice this means two banking days.