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Foreign Exchange (FOREX) Trading Primer

The largest traded

"market" in the world is not the U.S., Japanese or European stock

markets. It's the foreign exchange market. It's called Forex for

short, or also called the cash currency market. Speculators can and

do trade this huge market, in which nearly 2 trillion dollars (and

other currencies) can change hands every day.

The

main function of the foreign exchange market is to provide the

mechanism for making cross-border payments and determining exchange

rates between currencies. Major components that make up the Forex

market are the spot market (37%) used by traders and speculators,

swaps (43%), and options and forwards (20%).

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