what is forex fx 
forex fx refers to the global electronic marketplace for trading international currencies and currency derivatives it has no central physical location yet the forex market is the largest most liquid market in the world by trading volume with trillions of dollars changing hands every day most of the trading is done through banks brokers and financial institutions the forex market is open 24 hours a day five days a week except for holidays the forex market is open on many holidays on which stock markets are closed though the trading volume may be lower its name forex is a portmanteau of foreign and exchange it s often abbreviated as fx investopedia mira norianunderstanding forex fx forex traders use various analysis techniques to find the best entry and exit points for their trades forex exists so that large amounts of one currency can be exchanged for the equivalent value in another currency at the current market rate some of these trades occur because financial institutions companies or individuals have a business need to exchange one currency for another for example an american company may trade u s dollars for japanese yen in order to pay for merchandise that has been ordered from japan and is payable in yen a great deal of forex trade exists to accommodate speculation on the direction of currency values traders profit from the price movement of a particular pair of currencies currencies being traded are listed in pairs such as usd cad eur usd or usd jpy these represent the u s dollar usd versus the canadian dollar cad the euro eur versus the usd and the usd versus the japanese yen jpy respectively 1there will also be a price associated with each pair such as 1 2569 if this price was associated with the usd cad pair it means that it costs 1 2569 cad to buy one usd if the price increases to 1 3336 it now costs 1 3336 cad to buy one usd the usd has increased in value the cad has decreased as it now costs more cad to buy one usd in the forex market currencies trade in lots called micro mini and standard lots a micro lot is 1 000 units of a given currency a mini lot is 10 000 and a standard lot is 100 000 this is obviously exchanging money on a larger scale than going to a bank to exchange 500 to take on a trip when trading in the electronic forex market trades take place in blocks of currency and they can be traded in any volume desired within the limits allowed by the individual trading account balance for example you can trade seven micro lots 7 000 or three mini lots 30 000 or 75 standard lots 7 500 000 the forex market is unique for several reasons the main one being its size trading volume is generally very large the forex market trades over 5 trillion per day compared to 200 billion for the equities market 2the largest foreign exchange markets are located in major global financial centers including london new york singapore tokyo frankfurt hong kong and sydney 3the forex market is open 24 hours a day five days a week in major financial centers across the globe this means that you can buy or sell currencies at virtually any hour in the past forex trading was largely limited to governments large companies and hedge funds now anyone can trade on forex many investment firms banks and retail brokers allow individuals to open accounts and trade currencies 