CapitalXtend
flagEN
  • flagEnglish
  • flagفارسی
  • Company
    • Who We Are
    • Forex Academy
    • Financial Commission Funds
    • License & Certification
    • Company News
    • Careers
    • Contact us
  • Products
    • TRADING INSTRUMENTS
    • Forex Trading
    • Spot Metals
    • Spot Energies
    • CFD Indices
    • Cryptocurrencies
    • Contract Specifications
    • Trading Platforms
    • MetaTrader 4
    • MetaTrader 5
    • Trading Tools
    • Forex VPS
  • Accounts
    • Accounts Comparison
    • Leverage & Margin
    • Deposits & Withdrawals
  • Promotions
    • 30% Deposit Bonus
    • Cashback Reward
  • Social Trading
    • CopyTrading
    • PAMM
  • Partners
  • flagEN
  • Login Register
  • Login Register
  • Company
    • Who We Are
    • Forex Academy
    • Financial Commission Funds
    • License & Certification
    • Company News
    • Careers
    • Contact us
  • Products
    • TRADING INSTRUMENTS
    • Forex Trading
    • Spot Metals
    • Spot Energies
    • CFD Indices
    • Cryptocurrencies
    • Contract Specifications
    • Trading Platforms
    • MetaTrader 4
    • MetaTrader 5
    • Trading Tools
    • Forex VPS
  • Accounts
    • Accounts Comparison
    • Leverage & Margin
  • Promotions
    • 30% Deposit Bonus
    • Cashback Reward
  • Deposits & Withdrawals
  • Social Trading
    • CopyTrading
    • PAMM
  • Partners

What is Forex Trading?

  • FOREX or FX stands for Foreign Exchange is the world’s most traded market place where national currencies are traded, and Forex Trading refers to the process of changing one currency into another currency. It is basically a network of buyers and sellers who transfer currencies between each other at an agreed price. Simply put, if you think one currency is stronger than the other and trade it, you end up making a profit.

    Now, with this article, we aim to guide you through the Forex World and build an understanding of what exactly the Forex Market is, who trades in it, what moves these markets and How does forex trading work. So, let’s discuss each part in detail –

    What is the Forex Market?

    The foreign exchange market is where various national currencies are traded. To conduct foreign trade and business, these currencies need to be exchanged. For instance, if you are living in Europe and your business requires something from the U.S., then your company has to pay them in US Dollars (USD). The importer would have to exchange the equivalent value of the EURO into USD.

    The same goes for traveling. When you travel to any other country and exchange your national currency (the currency in your pocket) with the currency of the country you’re visiting. As a tourist, you have to exchange the currency into local currency. This will be considered as a Forex transaction.

    The international foreign exchange market has no central marketplace, and the trading is conducted OTC (Over-the-counter) electronically. This means, instead of having one centralized exchange, all transactions between the traders occur via computer networks.

    The foreign exchange market is accessible 24 hours a day, five and a half days a week. Currencies are traded in almost every time zone – London, New York, Singapore, Hong Kong, Paris, Sydney, Frankfurt, Zurich. The forex market is extremely active at any time of the day. The price quotes for the currencies change constantly!

    Who Trades Forex? And Why?

    Forex is largely traded by Central Banks, Banks, Corporations, Retail Traders, etc. for a variety of reasons – commerce, trading, tourism, etc.

    Central Banks are the ones who intervene in the Forex Markets as they control it. Banks trade to provide liquidity to the corporations as well as hedge their book in case of currency risk. Corporations may trade to buy or sell raw materials as per their requirements, and lastly, retail traders – who are like you and me, who trade to make profits.

    How does Forex Trading Work?

    FX Trading takes place directly between two parties in the Over-The-Counter (OTC) market. Traders can buy one currency and simultaneously sell another. Trading is done in an attempt to make profits by buying and selling currencies based on speculations on the direction currencies are likely to take in the future.

    Three Types of Forex Markets –

    • Spot Market – When Currency pairs are physically exchanged, taking place in the present or “on the spot” or within a short period (usually in two days)
    • Forward Market – Contract is bought and sold OTC between the two parties, who decide the teams of the agreement – specify price, date, and time of settlement.
    • Future Market – Future Contracts have specific dates, the number of units to be traded, delivery and settlement details, and a set currency price. This contract is legally binding.

    Currency Pairs

    A currency pair involves two currencies, one being the base currency, and the other is called the quote currency. There are three types of currency pairs –

    • Major Currency Pairs – EUR/USD, USD/JPY, USD/CHF, AUD/USD, GBP/USD, and USD/CAD
    • Minor Currency Pairs – EUR/GBP, GBP/JPY, EUR/CHF
    • Exotics – USD/PLN (US dollar vs. Polish zloty), EUR/CZK, GBP/MXN (Sterling vs. Mexican peso)
    • Regional – AUD/SGD, AUD/NZD (Australian dollar vs. New Zealand dollar), EUR/NOK (Euro vs. Norwegian krona)

    The EUR/USD currency pair considered to be the most liquid currency pair in the world. The USD/JPY comes second on the most popular currency pair list in the world.

    Suggested read: Start forex trading

    What moves the Forex Markets?

    The forex market is driven by two primary forces – Supply and Demand.
    When the value of the currency is increased, the demand increases and supply decreases. When the value decreases, the demand is smaller than its supply. Capital Flows (net quantity of currency traded) and Trade Flows (net imports and exports of the country) are the two main factors that influence the movements in the exchange rate.

    Capital Flows + Trade Flows = Balance of Payments.

    Let’s understand what other factors influence the fluctuations in prices.

    • Central banks move forex markets through monetary policies, exchange regime settings, and, in rare cases, currency interventions. They control the supply and announce the measures that will have a significant effect on currency prices.
    • News Reports and Human Sentiments play a major role in driving currency prices.
    • The economy’s performance matters as it gives insights into what the central bank’s next step might be.

    Suggested read: What is volatility in forex market

    Conclusion

    Forex Market is extremely liquid and is open 24 hours a day for traders to find trading opportunities.

    Want to know more about trading world, how to trade forex and where to find the right opportunities? We will help you get a full understanding of the forex world and gain new insights and have proper knowledge so you can enter the trading world with confidence!

Related Articles

View All  >
How to Trade Forex Using Crypto

How to Trade Forex Using Crypto

In this fast-evolving financial world, the coupling of crypto with traditional markets has spawned new trading avenues globally. One of the trendy a...

Read More >
When is the Best Time to Trade the Forex Market?

When is the Best Time to Trade the Forex Market?

The Forex market is a volatile global market operating around the clock for five days a week, with opportunity forever knocking on the door for any...

Read More >
How to Trade Stocks with Leverage 1:5000

How to Trade Stocks with Leverage 1:5000

Stock trading has never been so simple, and traders now have time-tested methods and advanced technology to capitalize on trading profits. One of th...

Read More >
Forex MT4 Robot: How to Create and Set Up

Forex MT4 Robot: How to Create and Set Up

In today's fast-paced financial markets, you will find traders searching for tools that will meet their needs. Forex trading has some popular ap...

Read More >
What is a Forex VPS? Benefits and How to Choose

What is a Forex VPS? Benefits and How to Choose

In today’s era, speed and stability are key to making a potentially profitable trade in currencies. Virtually, a Forex VPS Hosting could be an...

Read More >
What is Swing Trading in Forex?

What is Swing Trading in Forex?

Swing trading is an intermediate trading style, a compromise between day trading and longer-term investing. It involves holding onto positions from...

Read More >
What is Spread in Forex Trading & How is it Calculated?

What is Spread in Forex Trading & How is it Calculated?

Forex trading is known as the largest financial market in the entire world and it is a marketplace for everyone who wants to make a potential profit...

Read More >
What is Base and Quote Currency in Forex

What is Base and Quote Currency in Forex

Forex trading is a trading practice of global currencies through trading in pairs all over the world. When you engage in forex trading, you are deal...

Read More >
Difference Between Copy Trading & Social Trading

Difference Between Copy Trading & Social Trading

In the world of online investing, copy trading, and social trading have emerged as powerful strategies, especially in the forex market. These method...

Read More >
How to Manage Risk While Copy Trading?

How to Manage Risk While Copy Trading?

Copy trading has become a popular method that enables traders to copy the transactions of skilled traders. For beginners, it can simplify trading an...

Read More >
How to Stay Focused and Disciplined in Forex Trading?

How to Stay Focused and Disciplined in Forex Trading?

In forex trading, there are vast opportunities for traders if they are focused and disciplined. Success in this dynamic market of changing currency...

Read More >
Tips for Choosing the Right Brokerage Platform for Your Trading Needs

Tips for Choosing the Right Brokerage Platform for Your Trading Needs

Investors at all levels of experience can find a lot of opportunities in the exciting world of finance. But choosing the right brokerage platform is...

Read More >
What is a Currency Trading Platform?

What is a Currency Trading Platform?

Currency trading platforms are software systems that allow traders to participate in trading online currency. They give you a chance to view real-ti...

Read More >
Exploring the Best Forex Trading Indicators

Exploring the Best Forex Trading Indicators

The use of indicators is crucial while forex trading. Many traders use these indicators daily to help them determine when to buy and sell in the cur...

Read More >
Types of Hedges and Hedging Techniques

Types of Hedges and Hedging Techniques

Hedging is like a financial strategy that financial backers should understand and use since it accompanies a lot of advantages. It acts as an invest...

Read More >
Hedging in Forex Trading

Hedging in Forex Trading

Hedging is a strategic pillar of risk management in the complex world of trading, and understanding its nuances is paramount for any trader navigati...

Read More >
A Guide to Starting a Hedge Fund and its Benefits

A Guide to Starting a Hedge Fund and its Benefits

In today’s era, Hedge funds are one of the most well-known investment vehicles. They offer benefits for investors including the ability to pro...

Read More >
What is Hedging? – An Ultimate Guide

What is Hedging? – An Ultimate Guide

The concept of hedging can be applied to a variety of investments like bonds, commodities, stocks, and currencies. Hedging typically involves the ut...

Read More >
How to Trade Forex for Beginners

How to Trade Forex for Beginners

Welcome to the exciting world of Forex investments, where people can make a lot of money by swapping currencies all over the world. The

Read More >
How to start forex trading?

How to start forex trading?

Forex trading is an exciting market that offers tradable currencies the chance to react to changes quickly through a Forex trading platform. Forex i...

Read More >
What is Volatility in Forex?

What is Volatility in Forex?

The term 'Volatility' in the context of forex is a measure of the fluctuation in the value of a currency pair over a specific period. It is...

Read More >
Most Traded Currency Pairs in Forex Market

Most Traded Currency Pairs in Forex Market

If we talk about currency pairs then it is imperative to say that their existence in the early 90s gave rise to an entire domain of trading. Nowaday...

Read More >
Know the Difference between Forex Trading and Stock Trading

Know the Difference between Forex Trading and Stock Trading

The forex trading and the stock trading, are two of the most popular markets for traders of assets. Making the right decision when choosing one of t...

Read More >
All you need to know about Social Trading: Beginners Guide

All you need to know about Social Trading: Beginners Guide

Introduction: What is Social Trading? Trading is becoming more and more popular as people now turn to financial markets to provide them...

Read More >
An Overview to Foreign Exchange Market

An Overview to Foreign Exchange Market

Introduction to Foreign Exchange Market The Forex Market (also known as the Forex, FX, or Currency Market) is the over-the-counter (OTC)...

Read More >
Types of Forex Charts and How to Read

Types of Forex Charts and How to Read

When it comes to trading, there are a lot of different charts that can be used. This article will teach you about the different types of charts and...

Read More >
5 Profitable Forex Copy Trading Tips

5 Profitable Forex Copy Trading Tips

If you're looking for investment alternatives with low-cost and low-risk that also have a higher chance of success rates and rewards, Forex

Read More >
Know the Top Strategies to Trade Forex in 2022

Know the Top Strategies to Trade Forex in 2022

When it comes to trading foreign currency, it is unquestionably essential to ensure that you have identified the most successful tactics overall. Ke...

Read More >
Copy Trading Guide and its Advantages and Disadvantages

Copy Trading Guide and its Advantages and Disadvantages

Getting inspired by colleagues or an expert trader and beginning with trading cryptocurrency sounds incredible. However, it's not that easy; tra...

Read More >
A Complete Guide to Understand Forex Market!

A Complete Guide to Understand Forex Market!

What is Forex Trading? Forex is the settlement of transactions in any one currency for delivery of another. Its settlement system is ma...

Read More >
Basic Forex Trading Terminologies Every Trader Should Know?

Basic Forex Trading Terminologies Every Trader Should Know?

Trading and investing can be a complicated process. There is a plethora of terms to keep up with, and you need to understand what they mean in order...

Read More >
Everything You Need to Know About Currency Pairs

Everything You Need to Know About Currency Pairs

What is a currency pair? A currency pair enables the comparison of two distinct currencies' values. Consider the existence of two d...

Read More >
How Online Financial Trading Works?

How Online Financial Trading Works?

How Online Financial Trading Works? With the advent of online financial trading, investors seem to have become more interested in financ...

Read More >
Best Global Online Forex Broker

Best Global Online Forex Broker

The largest and the most actively traded financial market is the foreign exchange market. When it comes to trading in the foreign exchange market, t...

Read More >
Tips to Understand Online Financial Trading

Tips to Understand Online Financial Trading

Tips to Understand Online Financial Trading As in now, every individual wants to invest in some financial asset. Online financial tradin...

Read More >
What Is Online Financial Trading?

What Is Online Financial Trading?

What Is Online Financial Trading – Know the Advantage Investment has now become a lot easier thing than it used to be in earlier t...

Read More >
Forex correlation pairs and How to trade it

Forex correlation pairs and How to trade it

Welcome to the exciting world of Forex trading! To become a successful trader, you need to have a deep understanding of different market dynamics, a...

Read More >
Categories
  • Forex >
  • Spot Energies >
  • Spot Metals >
  • Indices >
  • Cryptocurrency >
  • Trading platforms: >
  • Miscellaneous >
CapitalXtend

With 15 years team experience, CapitalXtend is one of the most secure, fast and trustworthy trading platforms in the industry.

CapitalXtend ensures the security of your funds with up to $1M insurance coverage, underwritten by the renowned Lloyd's.

$1M insurance coverage

CapitalXtend triumphed at the Dubai Forex Expo 2024, proudly winning the prestigious Best Fastest Payout Award.

  • TheFinancial
  • Execution

  • Products Forex Trading Spot Metals Spot Energies CFD Indices Contract Specifications
  • Company Who we are Financial Commission Funds Contact us Accounts Comparison Leverage & Margin
  • Risk Disclosure
  • Client Agreement
  • AML Policy
  • Privacy Policy
  • Refund Policy
Follow us on:
Mobile App
mobile_app_playstore
  • Licence

    Regulated by FSC Mauritius

    CapitalXtend LLC Mauritius with registration number 198013 and registration address at Level 2, Suite 201 The Catalyst 40 Silicon Avenue Cybercity, 72201 Ebene, Republic of Mauritius is regulated by the Financial Services Commission of the Republic of Mauritius with an Investment Dealer License with license number GB23201599.

    Regulated by FC

    As a member of The Financial Commission, which is an independent and impartial Forex and CFD dispute resolution organization that offers up to €20,000 of coverage on a per case basis, on every dispute that's submitted via their organization from clients of listed member Forex Brokers - CapitalXtend assures its clients that their funds are secured.

    Kazakhstan Accreditation

    CapitalXtend LLC is a part of CAPITALXTEND GROUP LTD is incorporated in the Republic of Kazakhstan with Business Identification Number 201240028219 and has been registered as Financial Services Provider on the 25/12/2020 with the Ministry of Economy. The company is entitled to provide the following services to customers within and outside the Republic of Kazakhstan according to the accreditation issued by the Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan, dated 24/02/2021 and file number 36-0-12/5/ЮЛ-C-265: Payment Processing / e-wallets, Forex Services and Crypto Currency Services. Registered address K. Amanzholov street, building 174, postal code 090000, Uralsk city, West Kazakhstan region, Kazakhstan.

    Global Trading Authorization

    CapitalXtend is a Forex, CFD, Indices, and Commodities online trading brand of Capitalxtend Limited Liability Company with registration number 395LLC2020. Registered office: Suite 305, Griffith Corporate Centre, Beachmont, Kingstown, St. Vincent and the Grenadines.

  • Disclaimer

    Restricted Regions

    The information in this content is not intended to be provided to residents of the USA, Iran, Russia, Myanmar, Canada, Haiti, Suriname, North Korea, Puerto Rico and is not intended to be distributed or used by anyone in any country or jurisdiction area, as in the country or jurisdiction.

    Risk Warning

    Trading Forex and Financial Instruments involve a high level of risk and may not be suitable for all investors. The high degree of leverage can be either for or against you. Before deciding to invest, carefully consider your investment objectives and risk appetite. You should be aware of the risks associated with financial markets.

    Intellectual Property Rights

    Unauthorized duplication, publication, or quotation from CapitalXtend's website, in part or whole, without written consent, constitutes a violation of Intellectual Property Rights. Such actions, including downloading or accessing brand elements, will be litigated as infringement.

© 2025 CapitalXtend.com - All Rights Reserved