Foreign exchange Education

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What is forex

What is forex? 


Quite simply, it’s the global market that allows the exchange of one currency for another. If you’ve ever traveled to another country, you usually had to find a currency exchange booth at the airport, and then exchange the money you have in your wallet into the currency of the country you are visiting.


You go up to the counter and notice a screen displaying different exchange rates for different currencies. When you do this, you’ve essentially participated in the forex market! You’ve exchanged one currency for another. Or in forex trading terms, assuming you’re an American visiting Japan, you’ve sold dollars and bought yen. Before you fly back home, you stop by the currency exchange booth to exchange the yen that you miraculously have left over (Tokyo is expensive!) and notice the exchange rates have changed.

It’s these changes in the exchanges rates that allow you to make money in the foreign exchange market.


The foreign exchange market, which is usually known as “forex” or “FX,” is the largest financial market in the world. Compared to the “measly” $22.4 billion per day volume of the New York Stock Exchange (NYSE), the foreign exchange market looks absolutely ginormous with its $5 TRILLION a day trade volume.


The forex market is open 24 hours a day and 5 days a week, only closing down during the weekend. (What a bunch of slackers!) So unlike the stock or bond markets, the forex market does NOT close at the end of each business day.


Instead, trading just shifts to different financial centers around the world. The day starts when traders wake up in Sydney then moves to Tokyo, London, Frankfurt and finally, New York, before trading starts all over again in Sydney!