What Does Forex Mean?

The forex market is becoming an increasingly popular way for people with a bit of spare capital to speculate and earn more money. However, many are still not sure what the word “forex” actually means.
Forex has become the common shorthand term for the foreign exchange market. This market determines the relative values of the world’s currencies. It has grown in importance, particularly since the mid-1970s, when governments around the world abandoned fixed exchange rates.

The forex currency market has certain peculiarities. The most important of these is that it is completely decentralised. The stock markets may have their major centres such as Wall Street in New York, but the forex market has no brick and mortar building anywhere on the planet where it is centred.

By its very nature, forex currency trading is very volatile. Fortunes can be made or lost. The market runs Monday to Friday, cutting across time zones. Much of the trading is done on the internet, so a forex trader can continue working any time of the day or night.

The major currencies traded on the forex market are the US dollar, euro, British pound, Swiss franc, Japanese yen and the Australian, Canadian and New Zealand dollars. Trading is always done in pairs of currencies – for instance the euro and the US dollar. The trading affects the relative values of these currencies, and this is reflected in how much a company will charge for its goods when selling abroad, or the price of goods being imported. For the individual it becomes apparent when we change our money before taking a holiday abroad.