The foreign exchange market is the largest financial market in the world, in terms of trading volume. Known by several other names, including forex, FX or the currency market, every day over $5 trillion worth of currencies are traded across the world. Because of the volume of trades, price movements can happen very quickly, making currency trading not only the largest financial market in the world but also one of the most volatile.
Currencies are traded in major financial centers across the world, including London, New York, Tokyo and Hong Kong. This is done through a global network of banks and used by businesses, individual investors and central banks to convert one currency into another. While part of those transactions are done for commercial purposes, to buy goods and services in a foreign currency or convert proceeds back into local currency, the vast majority of currency transactions are undertaken with the aim to achieve a profit.
The value of a currency tends to reflect the macroeconomic situation in the country they represent. If the economy of a country is improving, the currency of that particular country is likely to strengthen. Alternatively, if the economic situation deteriorates, the currency is likely to weaken. Trading currencies is a speculation on the economic health of one country compared to another.
All Foreign Exchange rates are quoted in pairs. For example, if we were selling Sterling (GBP) and buying Dollars (USD), this would be written in shorthand as GBPUSD. In this example, GBP is referred to as the “base” currency, and USD is referred to as the “counter or quote” currency. The price at which this hypothetical trade would be carried out is the exchange rate between the two currencies.
Trade forex with Capital Index
As a Capital Index client, you can trade forex with up to 30:1 leverage and fast, reliable execution across 55 different currencies pairs. Take advantage of market movements across major, minor and some exotic currencies.
For a complete list of tradable instruments please visit our Product Specifications.