Crypto Terms: Letter F

What is Forex (FX)?

Forex (FX) - a decentralized currency exchange marketplace.
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Let's find out Forex (FX) meaning, definition in crypto, what is Forex (FX), and all other detailed facts.

Forex (FX) a.k.a. Foreign Exchange is a global market for trading currencies with a trading volume of over 3 trillion dollars. It’s a leading financial market in terms of size and liquidity. Forex is completely decentralized.

The Forex began forming in the early 1970s. It was prompted by the collapse of the Bretton Woods system. In turn, Nixon took the liberty of taking the dollar off the gold standard. This enabled exchange rates to be determined by demand and supply. And thus began the new age of the Forex.

The exchange rate is determined by participants which include day-to-day traders, brokers, and international banks, among many others. Generally speaking, major organizations like commercial banks hold the most power over the exchange rate. They interact in one of two ways: one-on-one or through a broker.

It’s similar to cryptocurrency trading. However, unlike cryptocurrencies, the FX market handles only fiat currencies. Participants of the FX market buy and sell in currency pairs. For instance, GBP/USD, EUR/USD, USD/CAD, and USD/JPY, among many other currencies. While cryptocurrency markets are available at any time and any day, the Forex market is closed during the weekends. 

Speculative trading is an often occurrence on the Forex market. Most of the trading happens on the spot markets. Derivatives rely on real-time volume to successfully operate. Investors take into account leverage, technical analysis, and scalping to make financial returns.

Additionally, some FX investors participate in hedge trading. They can employ futures contracts in addition to forward contracts when hedging.