Foreign exchange (also referred to as forex or FX) refers to the worldwide , OTC market (OTC) where traders, investors, institutions and banks, exchange, speculate on, buy and sell world currencies.
Trading is conducted over the interbank market, a web channel through which currencies are traded 24 hours each day , five days every week . Forex is one among the most important financial markets, with an estimated global daily turnover of quite US$5 trillion.
The price of the currency is typically an immediate reflection of the market’s opinion on the present and future health of its respective economy.
The rate of exchange of a currency versus other currencies may be a reflection of the condition of that country’s economy, compared to other countries’ economies.
While there are potentially lots of currencies you can trade, as a new forex trader, you will probably start trading with the major currencies.
They are called “major currencies” because they’re the most heavily traded currencies and represent some of the world’s largest economies. They label AUD, NZD, and CAD as commodity currencies.
Currency symbols always have three letters, where the first two letters identify the name of the country and the third letter identifies the name of that country’s currency, usually the first letter of the currency’s name.
These three letters are referred to as ISO 4217 Currency Codes.
By 1973, the International Organization for Standardization (ISO) established the three-letter codes for currencies that we use today.