What is forex and how does it work?

Take a closer look at everything you’ll need to know about forex, including what it is, how you trade it and how leverage in forex works.

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What Is Forex Trading? A Beginner’s Guide

Forex (FX) is a portmanteau of the words foreign [currency] and exchange. Foreign exchange is the process of changing one currency into another for various reasons, usually for commerce, trading, or tourism. According to a 2022 triennial report from the Bank for International Settlements (a global bank for national central banks), the daily global volume for forex trading reached $7.5 trillion in 2022.

What Is the Forex Market?

The foreign exchange market is where currencies are traded. This international market's most unique aspect is that it lacks a central marketplace. Instead, currency trading is conducted electronically over the counter (OTC). This means that all transactions occur via computer networks among traders worldwide rather than on one centralized exchange.

  • Current interest rates
  • Economic performance
  • Geopolitical sentiment
  • Price speculation

Forwards and Futures Markets

A forward contract is a private agreement between two parties to buy a currency at a future date and a predetermined price in the OTC markets. In the forwards market, contracts are bought and sold OTC between two parties, who determine the terms of the agreement between themselves.

A futures contract is a standardized agreement between two parties to take delivery of a currency at a future date and a predetermined price. Futures trade on exchanges and not OTC. In the futures market, futures contracts are bought and sold based on a standard size and settlement date on public commodities markets, such as the Chicago Mercantile Exchange (CME).

Frequently asked questions

Frequently asked questions about our crypto currency app. The crypto security for conducting trusted transactions.

What is Forex Trading?

Explain the basics of forex trading, such as buying and selling currencies in the foreign exchange market.

How do I open an account with SKY LINE TRADE?

Provide step-by-step instructions on how to create an account on the SKY LINE TRADE.io platform.

What are the trading hours for forex markets?

Explain the 24-hour nature of the forex market and mention any specific trading hours or sessions that traders should be aware of.