FX market – is the largest and most liquid market
FX market is the world's largest market with approximately $1.9 trillion dollars traded every day. In addition to being the largest global market, FX is also highly liquid market.
The FX market is known as Over -The - Counter (OTC) or 'interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralised on an exchange, as with the stock and futures.
Hotspot FX provides individual traders with direct access to 'interbank' bid/offer spreads on leading currency pairs.
Currency Pairs Explained
A trade always involves buying one currency and selling another. The objective of currency trading is to exchange one currency for another with the expectation that the market price will change. This change (hopefully) will cause one currency in a currency pair you bought to appreciate in value relative to the currency you sold.
If the currency you buy appreciates in value, and you close your open* position (by selling this currency), you are effectively buying the currency that you sold (and locking in your profit).
If the currency depreciates in value, and you close your open position by selling this currency (effectively buying the currency that you sold), you lock in your loss.
*An open position is one in which you have either bought or sold one currency pair against another and have not yet sold or bought back an adequate amount of that currency pair to effectively close the trade.
When you have an open position, you stand to profit or lose from price changes in the currency pair you are trading.
