Forex is commonly known as foreign exchange market where banks, investors and other financial companies swap one currency for another. The major foreign exchange process is called the spot exchange or spot forex. The spot exchange means immediate exchange. The spot exchange is carried out between five most important currencies like United State Dollar ($), Great Britain Pound (£), Japanese Yen (¥), Euro (€) dollar and the Swiss Franc. Foreign exchange market is the largest financial market in the world.

According to a judgment, the United States stock market possibly shall trade $10 billion in single day whereas the foreign exchange market (Forex) will do business up to $3 trillion in one day. The currency trading in FX market is carried out 24 hours a day.

Foreign exchange market was established in the year 1971 when universal trade shifted from permanent exchange rates to floating exchange rates. The foreign exchange market is also called FX market. The FX market does not have fixed exchange trading. The trading in foreign exchange is done with the help of banks, financial companies and various other personal dealers and brokers. The foreign exchange market (FX) is also known as Inter-Bank or OTC (Over the Counter) market where currency trading process is carried between two parties via telephone or with the help of Internet. Internet is most common way for carrying the fx trading. The term interbank is used many times in the foreign exchange language. The name interbank in terms of fx refers to the fact that the banks and other leading financial institutions exchange knowledge about the latest currency rates by which the customers and clients of banks and financial institutions can buy or sell their currency to earn profit. Quick profit is the main reason why people involve in online forex investment.

Important terms used in FX

Forex Quote: The term consists of two parts base currency and rate of a base currency. When we talk about the FX quote, there are two terms which are mainly discussed a) Bid b) Offer. The term bid is referred first while an offer follows the bid. Normally, United State dollar ($) is used as the base currency. If in case the US dollar is not used as base currency then the growing foreign exchange quote means a vanishing dollar.

Forex scalping: It is the clear cut trading approach that is based on low investment capitals and multiplied profits. It is a term that refers to usage of high and a big amount of short term trades for steadily increasing an account.

Forex Factory: It is the premier resource for the foreign exchange trading. It involves the fx events, fx forums, fx calendar etc.

PIP: Pip is known as price interest point. The pip is term used in foreign exchange market that represents the little price increment in a currency. Pip is the last decimal position of a quote. E.g. in US ($)/EURO (€) a movement for .5050 to .5051 is considered as one pip.

Spot Forex: Spot fx trading is carried out in lots commonly known as contracts. The normal value of lot is 100,000 US dollar. In the past few decades, a new lot is introduced, this lot is known as mini lot. The value of mini lot is 10,000 US dollar.

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