Forex is the abbreviated form of foreign exchange. It is basically the financial market where the exchange of one form of currency is made with another. Foreign exchange is also known as forex trading. The foreign market is an over-the-Counter market for the foreign trading of various currencies. This market constitutes all aspects of the buying, selling and trading of currencies in current or predicted prices.
Forex deals in the buying and selling of currencies and it is traded over the counter. There are many different currencies that can be traded in this market. These include U.S. dollars, Great British Pound, Japanese Yen, European Euros, Swiss Francs and other major currencies. All these are traded in pairs and all these are traded at pre-determined prices.
Forex deals in exchange of one currency for another and it is primarily traded in the forex futures markets. The forex futures markets are those where the traders buy and sell the underlying assets using the currency that they hold. The two primary elements in the exchange of currency are interest rate and exchange rate. When you are dealing in foreign exchange, you need to be aware of the interest rate as well as the forward outlook of the exchange rate.
In the forex market, you can buy and sell currencies depending on the situation. The exchange value of a certain currency may rise or fall due to various reasons. Forex is essentially based on the principle of supply and demand. For example, if there are more buyers of a certain currency than sellers, the exchange value of this currency rises and vice versa. When you look into the various charts, you will find that these price movements are often caused by speculations.
Forex speculation refers to the buying and selling of currencies based on their rates and direction of movement. There are various types of Forex speculation which include the spread bet, Forex spread and Forex leverage. The Forex market is considered to be one of the biggest financial markets and it has become popular among all kinds of traders. Most traders have been able to make some profits from the Forex markets.
Forex speculation is basically used to trade currencies without actually purchasing them at the same time. You would buy a currency pair, which has a higher rate and later on sell these currencies for higher rates. The spot forex market works similarly to the futures market in which spot prices indicate future exchange rates. The difference between the spot forex market and the futures market lies in the fact that spot prices are quoted every moment while the futures market is not updated manually. Futures also refer to the future exchange rate for a futures contract.