The Forex market, the largest financial market in the world, first started out in 1971. This was created when the floating exchange rates began to materialize. This market is not centralized like the stock market or the futures and the trading depends on computers and communications between thousands of Forex companies around the world.

FOREX stands for Foreign Exchange market where the various banks, investors and speculators participate in an activity involving exchanging of currencies with each other. The largest activity happens between five currencies: US Dollar, British Pound, Eurodollar, Swiss Franc and the Japanese Yen.

As the currencies of different points in the world never sleep, the market is open for 24 hours. The 24-hour interbank market is the main market for the currencies. The market follows the sun wherever it is up and will move from one major banking center to the next, from the United States to Australia, to New Zealand to South East Asia, then to Europe and back to the United States.

The professional traders of the major international commercial and investment banks dominate the FX market. But multinationals, global money managers, registered dealers, international money brokers, futures traders, options traders and private speculators also participate.

Participating in the FX market will:

• Facilitate an actual transaction
• Allow corporate treasurers and money managers to hedge against unwanted exposure to futures prices
• Provide a lot of profit to the trader

The FX market is considered as an interbank market as all transactions are done between two participants through the communications network. The trading itself is not centralized on an exchange like those of the stock market and the futures market. Compared to other financial markets, the investors in the FX can react to any fluctuations in prices of currencies due to political, economic or social influences that happen on real time, whether it is day or night.