ForEx (foreign exchange market) – an international foreign exchange market. Forex is a combination of trading, investment and speculative operations of exchanging of one national currency for another based on specified rates. These operations are conducted within the global financial network, which includes major banks, market-makers, brokers, dealers, pension funds, insurance companies and transnational corporations.

The currency exchange market has centuries of history, but the modern market formed during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system. As the result of this transformation central banks gained a possibility to influence national currency rates and economic situation in the countries.

Each country’s economic index depends on the level of development of the other countries, which influences the price of the national currency relative to the other currencies. And this is the main reason of Forex rates changing. The main currencies traded on Forex are USD, EUR, JPY, GBP and CHF. Profits are based on national currency being a commodity like coffee or sugar and the same medium of exchange as gold or platinum. In terms of international investments, money (currency) has become as popular as stocks and securities.

Currently the foreign exchange market is one of the largest and most liquid financial markets in the world. The average daily volume in the global foreign exchange market is about US$1.5 trillion. Unlike the stock markets, which only operate during daytime hours the foreign exchange market operates 24 hours a day, five days a week. This 24/5 work week means that traders can react to news when it breaks, rather than waiting for the market to open, as is the case of stock market. Access to computers and the World Wide Web have allowed for rapid growth in Internet-trading. Financial operations are carried out remotely with the help of the special program – trading terminal. These days, you can profit from changing currency rates if you have a PC or mobile device connected to Internet and an account with company.

Contents Step 2: How does a deal make a profit