Foreign Exchange Market Flashcards, test questions and answers
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What is Foreign Exchange Market?
The Foreign Exchange Market (Forex or FX) is a global decentralized market for the trading of currencies. This market determines the foreign exchange rates for every currency and also provides an opportunity for speculation. It includes all of the aspects of buying, selling and exchanging currencies at current or determined prices. In terms of volume traded, it is by far the largest financial market in the world with an average daily trading volume exceeding $5 trillion dollars.The Forex market is open 24 hours a day, five days a week, allowing traders to access their accounts from anywhere around the world at any time. This makes it much easier to manage risk and make quick decisions based on changes in currency values over short periods of time. Unlike other markets, there is no centralized exchange where transactions take place; instead they are conducted through various interbank networks within different countries and regions worldwide. As a result, there are no commissions charged by brokers or banks as these costs are already factored into the price fluctuation. When trading in Forex markets, traders must take into account factors such as economic news releases and geopolitical events that affect currency prices over short-term or long-term timeframes. Traders use technical analysis to determine entry and exit points based on chart patterns while fundamental analysis focuses more heavily on macroeconomic factors such as inflation rate differences between countries that can lead to large price swings over longer periods of time.