Foreign Exchange (Forex)

Understanding the global currency market

The foreign exchange (forex) market is the marketplace where world currencies are exchanged. It is the largest and most liquid financial market globally, with activity spanning different countries and time zones. Exchange rates fluctuate due to a variety of factors including international trade, economic conditions, and geopolitical events.

What is Margin?

In the context of trading, margin refers to the amount of capital set aside to open and maintain a position. Margin allows participation in transactions that are larger than the initial deposit. While this mechanism makes forex trading accessible, it also introduces significant risks, as losses can exceed initial amounts invested.

What is Leverage?

Leverage enables investors to control larger positions than their actual capital. For example, with leverage an investor may be able to enter into positions of greater size than their initial funds. However, leverage is considered a high-risk tool because it can amplify both potential gains and potential losses. Even small changes in exchange rates can result in substantial financial impact.

When is the Forex Market Open?

Because different financial centers around the world operate in various time zones, the international forex market is accessible around the clock, typically from Sunday evening through Friday afternoon (U.S. time). This global accessibility makes the market unique but also means it is influenced by events worldwide.

Disclaimer: This page is intended for educational purposes only and does not provide investment advice or a recommendation to trade. Forex trading is complex, highly volatile, and carries a high level of risk. Individuals should carefully assess their objectives and consult licensed professionals before considering participation.