Understanding Forex

What is Forex?

Forex is the global market place, providing an over-the-counter platform for trading currencies of the world.

It is the process of changing one currency into another, mainly for the reason of trade, commerce, and tourism. For example, buying USD with AED before visiting the USA.

The liquidity of a financial instrument means how quickly it can be converted to cash. Forex is the most liquid market in the world.

Exchange rate determines the worth of one currency against the other. For example, 1 USD is equal to 3.67 AED (Reflecting on June 6, 2020).

Forex markets can be spot markets (dealing in cash), as well as derivatives markets (protection in the form of an agreement to buy or sell currencies at the rate prevailing at the time of agreement).

Forex, also known as the foreign exchange market, has no physical setting and runs through a network of individuals, banks, and businesses.

There are no specific hours for Forex trading, as many of the people love to trade between 8:00 am and 4:00 pm. These are termed as market opening and closing times.

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