WHAT IS FOREX: THE GLOBAL CURRENCY EXCHANGE MARKET

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Forex is a short form for foreign exchange. Forex is the world's most vast liquid financial market where currencies all over the world are being traded.

We have over 190 currencies in circulation in the world today.

These currencies that are being bought and sold are done so in pairs, this consists of two different currency that are traded together.

Take for example the Dollar and the naira, which is represented as USDNGN. In this case the currency which comes first or is written first is called the base currency while the second one is called the quote currency.

Base currency is the currency whose value is always equal to one and it always comes first.

While quote currency is that which comes last and it's value represents how much of it is equivalent to the base currency.

WHO CAN TAKE PART IN FOREX

The forex market unlike the stock market is decentralized that means it is a marketplace that opens 24/5 meaning 24hours a day 5 days a week.

With this unique feature just about anyone or organisation with the knowledge and finances can participate and these includes;

BANKS:

Commercial banks have a very important role to play in the forex market as they serve as market makers facilitating the trading of currency for themselves and for their clients.

RETAIL TRADERS:

Other retail individuals take part in the forex market by using online platforms.

These platforms have brokers who provides the private individual with leverage which helps amplify their trading positions as it mostly makes up 99% of the money needed to trade.

ORGANIZATIONS:

Cooperations who performs transactions across multiple countries can also take part in forex trading inorder to fence against currency risks.

IMPORTANT FEATURES OF FOREX TRADING

There are a lists of unique features which the forex market possesses that distinguishes it or set it apart from other global markets.

These includes the following;

HIGH LIQUIDITY:

Liquidity refers to the simplicity or ease with which an asset or investment can be bought or sold without causing any significant change in it's price.

It is the degree or measure of how quickly an asset could be converted to cash without significantly affecting it's market value.

Forex have high liquid assets and this is a feature that is every trader and investor considers seeing as it affects the simplicity and ease with which they could enter a trade. Liquidty ensures that traders can buy and trade assets at the current market price.

<H5>LEVERAGE:</H5>   

In forex trading the traders are offered something called leverage.

Leverage is very good because it allows you trade with more capital than you invested depending on the type of leverage you choose.

This feature can be very advantageous if the market moves in your favour as it allows you to make more profit than you will make with the initial capital you invested with.

24 HOUR TRADING:

Forex offers it users a 24hours trading window for five days allowing traders and users to respond and take action based on news and global events.

SIGNIFICANCE OF FOREX TO THE GLOBAL MARKET.

The forex market provides and plays a very important role in the global economy.

HEDGEING:

Forex trading provides multinational corporations with the opportunity to avoid or fence against currency risk. This ensures that fluctuation in the value or exchange rate does not have much adverse effects on the financial situation of the cooperations.

<H5>INTERNATIONAL TRADE:</H5>

Forex enables and provides means for exchanging and converting currency and therefore allowing for nations to trade amongst each other. Many other significance of forex to the global market include; price discovery and price speculation and investment.

CONCLUSION

In conclusion, the forex market is a unique, important and vital part of the global financial landscape, seeing as it plays various important roles which includes; facilitating international trade, investment, and risk management.

Understanding and having the knowledge about the basics, participants, key features, and significance will help private individuals and cooperate organisations to navigate this vast but rewarding marketplace effectively.

However it is important to recognize and know that 

every good thing always have advantages and disadvantages.

Forex trading carries a lot risks and potential to ruin your life, a statement I hear from my forex friend but this is not to deter you.

But, proper education and risk management will help you navigate and be successful in this market.