What is Forex?

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The Foreign exchange market is the marketplace where currency transactions
happen. It is decentralized. This is where currencies of the world exchange hands;
24hrs per day between Sunday 5pm and Friday 5pm. $6.6 trillion exchange hands on
any given day. In contrast, the New York Stock Exchange “the stock market” only does
$22.4billion in transactions daily.

In order to do business (buy and sell) in a foreign country you will need to use
that country’s currency. For example; I have plans to travel to London next week. I will
go to the bank and use my Eastern Caribbean money to purchase Great British Pounds
to spend on my trip. The bank will then look to the Forex market to determine the price
of the Great British Pound, add their markup and then complete the transaction. *The
bank would actually have to use the EC Dollar to purchase the US Dollar, and then use
the US Dollar to purchase GBPs, before selling it to me.
If you’ve ever wondered why the price of the Great British Pound is always
different every time you ask the banks, this is because of supply and demand
fluctuations. Big sums of money are constantly exchanging hands and will cause
fluctuations in currency prices, depending on which currency is being sold to buy
the other.

Currency traders are those placing bets to profit from fluctuations of the big
sums exchanging hands. Think of it as egg prices during Christmas time (if you are from the Caribbean). We as traders, knowing egg prices will rise around Christmas, we buy eggs in November (before the
price raises) to sell in December for the highest price we can sell it for.

Dwayne Clement

Risk Disclaimer for Forex Trading
Trading foreign exchange on margin carries a high level of risk, and may not be suitable
for all investors. Past performance is not indicative of future results. The high degree of
leverage can work against you as well as for you.

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