What is FOREX? Currency Forex Trading, also known as FX Trading is an alternate way you can make money in a trading environment. Everyone has heard of the New York Stock Exchange (NYSE) or the Chicago Mercantile Exchange (CME), each featuring either stock trading or options and futures trading. Forex or FX Trading involves the buying and selling of currencies instead of stocks, bonds, options or futures.

FOREX stands for the FOReign EXchange market, which is the international financial market where currencies are traded. The foreign exchange market began in the 1970s and is now the largest financial market in the world, with an average daily turnover of US $1.9 trillion. That's 30 times the amount of daily activity on all of the US stock exchanges combined.

FX trading is also very different, in that, there is no physical floor or exchange area like there is in New York or Chicago where the Currency Market is located. The Foreign Exchange Market(Forex) or FX Market can only be accessed by phone or by electronic network.

Forex Market Hours

The advantage of not having a central location, but instead having an electronic network, is that Currency Forex Trading can operate 24 hours a day. In fact, the Currency Exchange is open for trading all day and night during work days, roughly 5 days a week.

Forex Market hours begin at 7:00 pm each Sunday, New York time, currency forex online trading begins as markets open in Tokyo, Japan. Next, Singapore and Hong Kong currency markets open for FX trading at 9:00 pm EST, followed by the European markets in Frankfurt (2:00 am), and then the currency trading begins in London at 3:00 am. By 4:00 am, all European currency forex trading markets are in full swing, and Asia has concluded their currency trading day. Then the U.S. markets open first in New York around 8:00 am Monday, just as Forex market hours in Europe wind down. Australia will take over with the start of their currency trading around 5:00 pm, and by 7:00 pm Tokyo is ready to re-open. All of the Forex market hours above were quoted in Eastern Standard Time (New York). And so you can see that the trade of World Currencies takes place round the clock basically from Sunday evening until late Friday night.

FX Trading: Buying and Selling Currencies

Since the FX Trading Market is the largest financial market in the world, it is also the most liquid. This means it is easy to get in and out of a position whenever you want. The more liquid a market is, the easier it is to initiate and fulfill a transaction. Of course, the objective when currency trading in any market is to buy low and sell high. With Forex Trading available online, a person buys and sells the currencies of other nations from his or her computer. For instance, if one believes the U.S. Dollar will strengthen against the EURO they can buy Dollars now and sell them later at a profit.

Traders are able to take advantage of intra-day volatility thanks to the low spreads and enter positions for short time periods, such as minutes and hours. Unlike equity trading, where restrictions limit a trader's ability to profit from a market down turn, there are no such constraints on currency trading. Currency traders can take advantage of both up and down trends thus increasing their profit potential.

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