Understanding the Scope of Forex Exchange

Conceptualized in 1971, the forex market has witnessed steep rise in its trade since then. It provides a platform to the traders, of all over the world, to exchange their currencies as they stipulate it according to their needs and profits. The average daily exchange accounts for a bulky volume of 1.5 trillion U.S. dollars; of which one billion traders daily pack in the same amount at the end of the day.

A little knowledge of the forex can earn you a substantial amount of profits. The market deals with the exchange of currency of one nation with the other; or one can also define “foreign exchange” as the way a currency is bought or sold (valued) with respect to another currency. Sometimes, it is also regarded as the way by which debts between two nations that use different currencies are paid.

The scope of the term “foreign exchange” is not limited to a basic definition; rather it covers in several aspect including:

• Forex Exchange Rate: The forex exchange rate determines the value a particular currency holds with respect to another. You can also state it as the purchasing power of currency A with respect to currency B of some other nation. For example, 1.30 Canadian Dollar is equivalent to a U.S Dollar.
  
  
• Foreign Exchange Services: It can be regarded as the various services that let you get linked with the forex trading market. It is basically the communication network that establishes your link with the same.
  
  
• Foreign Exchange Markets: These can be looked up as those business centers where in the actual process of buying and selling of the various currencies are carried out. It is important to note here that forex is not some central trade market, rather it is operated through banks, corporations, individual’s and other such organizations located all over the world. There is no chief trading center or head office of the forex. However, the major trading centers are located in New York, Tokyo, London, Hong Kong, Singapore, Paris, and Frankfurt. These operate by telephone lines or via Internet, for complete 24hrs a day servicing only for 5 days a week.