What is “Forex trading”?

“Forex” (foreign exchange) is the buying or selling of overseas currencies. “Forex trading” can be an extremely lucrative business. Famously wealthy currency speculators include Joe Lewis and George Soros. These guys have made fortunes identifying currency trends and anticipating market movements! When we buy overseas goods in local shops, or buy petrol or go abroad, we are part of a currency exchange. The retailer has acquired goods from a wholesaler, who has acquired the goods from a local or EU distributor. Somewhere in this process of goods changing hands, currency trading has been employed as the tool of international trade. The management of currencies is the task of the country’s central bank and/or the Government. There are many forex market participants, including banks, brokers, multi-national companies and investment institutions. Since the relaxation of UK exchange controls in 1979 individuals have been active in the forex market.

Currency dealing or “forex” dealing/ trading takes place in every major city in the world. Major forex centres are London, New York, Tokyo and Sydney. London is the world’s biggest centre for foreign exchange trading worth $3,000bn per day. Forex dealing is popular because it is a highly liquid, transparent market open 24 hours and uses standard terms that are easily understandable. These days forex dealing is so easy you can trade from your own home computer! You can use leverage to increase your exposure to market movements. Forex dealing offers flexibility in that the investor is able to take a more intuitive approach.