What is forex market & how does it work?

Forex (FX) market is a global electronic network for currency trading. Formerly limited to governments and financial institutions, individuals can now directly buy and sell currencies on forex. In the forex market, a profit or loss results from the difference in the price at which the trader bought and sold a currency pair.

What are the different ways to trade Forex?

There are three different ways to trade forex, which will accommodate traders with varying goals: The spot market. This is the primary forex market where those currency pairs are swapped and exchange rates are determined in real-time, based on supply and demand. The forward market.

What currency pairs are used in forex trading?

Each forex trade involves a pair of currencies. Investors who are interested in forex have the ability to trade several different currency pairs: major pairs, minor pairs, exotic pairs, and regional pairs. The major pairs involve the US dollar, and include USD/JPY, GBP/USD, USD/CHF, and EUR/USD.

Are forex trades regulated?

Forex trades are tightly regulated in the U.S. by the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC). However, due to the heavy use of leverage in forex trades, developing countries like India and China have restrictions on the firms and capital to be used in forex trading.