The foreign exchange market (also known as Forex, an English abbreviation of Foreign Exchange) is a global, decentralized market where currencies are traded.

It is by far the largest market in the world in terms of cash value traded, and includes trading between large banks, central banks, large and small speculators, multinational corporations, governments, and other financial markets and institutions. The small speculators are a small part of this market and can participate directly through companies dedicated to providing services TRADING or indirectly through brokers or banks.

One of the main features of the Forex market is the high very high daily volume of transactions: they move about 3 trillion U.S. dollars (USD) each day. Thanks to this market specialist firms have emerged that are responsible for providing account management services in forex, investment funds and automatic systems. Today you can say with total accuracy the foreign xchange market (Forex or FX) is the financial market with the greatest growth in the modern financial world.

In recent years, the FX market has become very popular among private investors. This is due to the possibility of leverage and the opportunity to participate in the rise and fall of the markets. Intermediaries offer larger and consolidated accounts for free practices that give confidence to inexperienced operators. It is important to understand the financial instruments offered by the FX brokers, and know that there is always risk of loss. Each one must decide and identify the level of risk you are willing to take.

One of the main differences compared to the stock market is that the Forex market lacks a centralized location. It operates as a global electronic network of banks, financial institutions and individual traders, all dedicated to buy or sell foreign currency under xchange their volatile relationship.

The currency futures contracts were introduced in 1972 at the Chicago Mercantile xchange and Chicago Stock xchange and is one of the contracts that are traded more actively. The volume of currency futures has grown rapidly in recent years, but accounts for only about 7% of total foreign xchange market, according to The Wall Street Journal Europe (05/05/2006, p. 20). The ten most active participants accounted for almost 73% of trading volume, according to The Wall Street Journal Europe (2/9/06 p. 20).

Large international banks provide foreign xchange to the purchase price (bid) and selling another (ask). The spread is the difference between these prices and usually constitutes remuneration to the institution by its role as intermediary between the buying and selling using its channels. Usually the spread in most traded currencies is only 1-3 pips or points. For example, if the bid (purchase price) in a quote of EUR / USD is 1.2200 while the ask (selling price) is set to 1.2203, you can clearly identify the 3-point spread.