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Foreign exchange is an off exchange retail foreign currency market where participants purchase currency in exchange for another at the current exchange rate.

Forex can affect the lives of everyone, regardless if you don't invest in currency. Investors are attracted to the forex market because of its possibilities and advantages. investors enjoy the added liquidity and volume forex has to offer. In this section, you will be introduced to the Spot or Cash Forex market.

The word "Forex" is derived from the words foreign exchange and is one of the names of the international currency market. Forex is the largest financial market in the world, trading up to $4 trillion in turnover every day. This tremendous turnover is more than the combined volumes of the leading stock markets around the world on any given day.

This trade volume creates a very liquid market that is desirable to trade in. Unlike other financial markets, the Forex market operates 24 hours a day, 5.5 days a week (6:00 PM EST on Sunday until 4:00 PM EST on Friday). Through an electronic network of banks, corporations and individual traders exchange currencies, Forex trading begins every day in Sydney, moves to Tokyo, followed by Europe and finally the Americas - making the market available 24 hours during the week. Trades are executed through the Internet using trading platforms.

The development of personal trading platforms and the smaller transaction costs caused a sudden increase in retail investors. With the advent of the Internet and growing competition it is now easily within the reach of most investors.

Just like other investment alternatives, foreign exchange offers traders/investors a market where they can buy or sell a specific currency pair. The currency pair may be the Euro versus the US Dollar, the US Dollar versus the Japanese Yen, the British Pound versus the US Dollar, the Euro versus British Pound, or a number of other currency combinations.

For active traders and investors, foreign exchange should be no different than other investment products such as equities, commodities or fixed-income. Because of globalization in the economic world and consolidation of whole economic regions (i.e., the European Union), including currencies in a portfolio helps to diversify assets and can reduce risk.
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