Forex

Forex, an acronym for foreign exchange is a decentralized market where trading of the world’s different currencies is done. Trading is done based on the exchange rate of the two currencies in consideration. Even though there is no specific designated market to carry out these trades, the most important centers are located in London, New York, Hong Kong, Paris, Sydney and Frankfurt where much of the Forex trading takes place. These centers are spread across almost every time zone implying when the US trading time ends; trading in Tokyo and Hong Kong starts which facilitates foreign currency trade 24 hours a day.

Example:

Consider a trade on forex involving a currency exchange rate of 1.2171 EUR/USD, this implies that if a trader has to buy one Euro (price currency), he will have to pay 1.2171 U.S dollars (base currency).