Question Time – What is Forex?
Forex which is the shortened name for foreign exchange or FX as it is known by its new acronym, is the exchange of one currency for another.
It is very similar to the same foreign exchange that occurs when you exchange your dollars or pounds for a foreign currency when you go abroad on your holidays or vacations. This is known as retail foreign exchange.
In retail foreign exchange the exchange rates offered to you are normally quite static, generally fixed around the same base rate and often you are left losing money when you finish your holidays and exchange your foreign currency back to your home currency of pounds or dollars.
The rates that you see on the boards where you change your money up are rates which come from the stock exchange by one method or another. These may be given by the banks or provided by the exchange company.
Before the days of the Internet speculators and investors could invest in the foreign exchange market. To do this they would open an account with a Forex broker, deposit funds with the forex broker and instruct the forex broker to buy or sell currency pairs normally over the telephone or sometimes by fax.
Now if you wish to trade on currency pairs and when I say trade it’s kind of betting on currency pairs, that there are thousands of Forex brokers out there to choose from. Some of these forex brokers are still very much manual in their operation and attract high net worth individuals to invest in their services normally down to a much more personalised service.
For the rest of us who are not high net worth individuals we can trade forex normally from as little as one dollar without the need to pick up the phone or talk to anyone.
The process is very similar for example you would decide on your broker, contact them, register with him and deposit some money ready to begin your Forex trades.
In essence that is Forex!
In forthcoming articles on forexbrokerclub.com we will give a much deeper insight into the currency feed and how it operates, spreads, the lots and of course keep you up-to-date with the best and most trusted Forex brokers that you can deposit your money with.