Forex stands for foreign exchange. Forex currency trading is the trading of currencies. Forex traders try to profit by buying one nation’s currency and at the same time selling other ones for small increase or decrease in exchange rates. Forex currency trading market is a worldwide market with 24 hour trading capability. It is currently the largest financial market in the world with 2.7 trillion US dollar worth trades a day; more than 30 times over NYSE and NASDAQ together, and more than 10 of all equity markets together. The key players of forex currency market include banks, corporations and individual forex traders.

The establishment of modern forex currency trading market was done in early 1970’s with the popularization of free floating currencies. In 1972, the gold standardization of the currencies were lifted which made the currencies free floating – changing the exchange rate with change in value of other currencies. The market became popular in 1980’s as the trade, currency movement and migration across borders increased. The most important revolution, on an individual trader point of view, occurred in 90’s when online trading through internet started. The globalization made forex currency market more favorable for trading, as the control of states over their currencies decreased considerably.

Unlike stock trading or futures trading, forex currency trading does not require and has a specified market. All trades are executed Over The Counter (OTC) through high-speed interconnected electronic networks. The banks have their own dealing rooms and most individual traders trades from their home on specific encrypted currency trading software platforms. These trading platforms are usually of two sides as online or broker-side trading platforms and direct access or trader-side trading platforms.

Forex currency trades are done in pairs, the currency pairs, such as EUR/USD, GBP/USD, USD/JPY, and USD/CHF. Each three letter code you see before and after the slash (/) denote one currency; EUR for Euro, USD for United States Dollar, and GBP for Great British Pound. The profit or loss depends on the rise or fall in exchange rate of the second currency in a pair to the first one. The five major currencies which constitute around 70% of total trades include US Dollar, Euro, Japanese Yen, British Pound and Swiss Franc. The major country for forex currency trading is the London, with around 32% market share, followed by USA with around 18% market share.

Forex currency traders follow a number of strategies to profit from market. They do detailed studies over nations’ economic history, policies, GDP growth, etc to find out right currencies with profit marking chance. Around 90 percent of currency trades are carried out by banks and 73% of total market volume is consumed by 10 international banks with Deutsche Bank leading the front. Retail traders with currency brokers constitute only 2% of the market.