What is Forex?

People have two main perceptions about Forex. Some people think that is a synonymous to scam and it a quick way to lose your hard earned money in a few months. Another group of people think that it is the other way round! They dream of quickly multiplying their money using Forex. However, Forex does not seem to fit in either category. Forex, simply defined is trading platform, where traders can exchange Forex currency. This means that if you are from US and have USD and if another person is from Japan and has Japanese Yen and both traders want to have each other currencies, then they can exchange their respective currencies as per market rates or mutual agreement.
That was a simple explanation of Forex for you. However, this system is much more sophisticated and dynamic that what it reads from the theory. The Forex market is world’s largest trading market with multi trillion net exchanges going every day. The market is open 24 hours a day and lots of people earn and make millions from it every day.
Earlier, Forex was ruled by US Dollar. British Sterling Pound too was and still is a valuable currency in Forex Market. In the past decade, Euro has entered the market and it has adversely affected British Pound, which had indirectly helped to strengthen US Dollar in international arena. However, Pound still remains stronger in terms of market value against both USD and Euro. With development of Japan after the second world war, Japanese Yen too has shown its presence felt in the Forex arena. Other Asian and African currencies are not in commanding position at present.
A simple formula to operate in Forex Market is to be in touch with the international market trends and act in such a way that your moves are profitable the currency which is being traded by you. For example, if you have got a stock of all the currencies with you, then you would like to trade the one in which you can earn the maximum profit. This profit can be both short term and long term, which is again determined by market trends. So, in order to be successful in Forex Trading, you have to have a good sense of market trends.
Forex is multidimensional topic and it is hard to explain everything in theory. Once you are in the market and start analyzing it, you will develop a better understanding towards it. So, the best way to understand Forex Market is by becoming a part of the trading!

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