Euromoney  6 hrs ago  Comment 
The provider of settlement services for foreign exchange is looking to expand its influence in the FX markets by providing a netting service for payments that is available to institutions that are not CLS members and in currencies it does not...
Mondo Visione  7 hrs ago  Comment 
IPC, a leading global provider of secure, compliant communications and networking solutions for the financial markets community, and FastMatch, a leading financial technology company focusing on foreign exchange trading, today announced that...  9 hrs ago  Comment 
WASHINGTON (dpa-AFX) - Moody's Corp. (MCO) said that it raised its GAAP earnings per share outlook for the full year ending December 31, 2016. Full year 2016 GAAP earnings per share is currently expected to be in the range of $4.70 to $4.80,...
Mondo Visione  Sep 28  Comment 
EBS BrokerTec, ICAP's market-leading electronic foreign exchange (FX) and fixed income business, announces today that it has gone live with EBS Live Ultra, its fastest FX data product to date. EBS Live Ultra has two data interval rates: 100...
The Hindu Business Line  Sep 27  Comment 
The foreign exchange market is touted to be the most efficient market in the world, but a retail customer who wants to pick up some foreign exchange still faces opacity. One is usually at the mercy of...
Financial Times  Sep 27  Comment 
Mexican peso rallies sharply and seen as a proxy for pricing US political risk
Mondo Visione  Sep 27  Comment 
SWIFT announces today that HSBC is the first customer to use its new FX Business Insights information service. The new FX service from SWIFT allows its customers to continuously measure their FX business performance and make more informed...
Financial Times  Sep 27  Comment 
Traders drive swings in yen, Mexican peso and Canadian dollar
The Hindu Business Line  Sep 26  Comment 
This is with reference to ‘Our external account looks gloomy’ by Madan Sabnavis (September 26). Foreign exchange reserves are bound to rise when economic activity is brisk but at this moment, activi...
Benzinga  Sep 26  Comment 
USD/JPY is trading at 100.34, down 0.71. The pair has extended the session losses as overseas forex traders wind down trading for the day. Market chatter about global headline news and money flows has kept buyers and sellers active....


Looking for Forex Trading Strategies? Check out the Forex Trading page


Forex (FX) is short for foreign exchange and refers to the trading of one currency for another. Unlike stocks or futures, currency trading is an over-the-counter market with no central exchange.

Currencies typically trade in pairs such as the EUR/USD or USD/JPY. Currencies common to Forex tend to be the most liquid currencies such as the U.S. Dollar (USD), Japanese Yen (JPY), Euro (EUR), British Pound (GBP), Swiss Franc (CHF), Canadian Dollar (CAD), and Australian Dollar (AUD).

FOREX[1] is the world's most traded market with an average daily turnover of USD $3.2 trillion[2].

Trades occur 24 hours a day, starting Monday morning in the Asia-Pacific region and ending Friday evening in North America.

Common FX Practices

Corporate FX Programs

Many corporations who receive a significant portion of their revenue from overseas (overseas refers to any sites outside of the chartering country - "headquarters") may wish to participate in FX Hedging. This is primarily because currency volatility can majorly effect a company's stated income. A long-winded example is below.

Say Google receives more than 50% of its revenue from outside the United States. This creates a situation in which the relative strength of the U.S. Dollar (USD) can impact its financials. If the Euro (EUR) strengthens against the dollar, it has a net positive impact on Google's income statement. If EUR/USD decreases, meaning more USD can be bought with 1 EUR, then when the company calculates the value of its EUR-denominated revenue, it will see a higher than average USD amount. Forex

Retail FX

In the last several years, the Retail FX market has opened up substantially with the spread of the internet and online trading. This segment is said to occupy about 4% of all forex transactions and is growing rapidly. One of the main reasons for this phenomenon is the simplified trading platforms like TradeStation that were recently developed by innovative internet brokers, aiming to educate the lay person and help get into this lucrative market.

Example with Fake Numbers and no Transaction Costs

Let's say, for ease of demonstration, that 1 EUR = 2 USD, or that 1 Euro can purchase 2 U.S. Dollars (this is not the case, but it's easy math). Furthermore, we can claim that Google makes 1 million Euros in December 2008 in France. If Google recognizes that revenue in USD, we'd say that Google made 2 million dollars that month (from France). Suppose, however, that the Dollar strengthens against the Euro, and instead we get 1 EUR = 1.5 USD (USD appreciates, which means that 1 Euro now buys less than before). This would instead result in 1.5 million dollars for December, instead of the previous 2 million.

On your own, try seeing what would happen if the USD weakens against the Euro (1 EUR = 3 USD). This volatility is something that most companies desperately seek to avoid. One can probably see already, the more money at risk, the greater the trading activity. Vis-à-vis, the more currencies that impact revenue, the greater the trading activity. As a result, these companies engage in all sorts of Hedging practices, including using currency swaps and Derivatives (Options, Futures, and forwards), to limit their exposure to currency movement, especially for the primary currencies as listed above.

Example Currency Pairs

U.S. Dollars to Euros

Euros to U.S. Dollars

U.S. Dollars to Canadian Dollars

Canadian Dollars to U.S. Dollars

U.S. Dollars to Japanese Yen


  1. FOREX
  2. Forex 101
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