When a nation’s currency is exchanged for that of another, we call it Foreign Exchange. Some call it Forex and some call it FX, but either name you use, it is not like any other financial market.  The Forex trading market has no physical location that you can go visit or tour. This type of trading takes place through global networks of banks, individuals and corporations.  The currencies of the world are traded in pairs like Euro/Us dollar or the US dollar/Yen.

There are three major trading tools for Forex: Day trade, spot trade and forward trade. Day trade is base on the market price that is current and these daily transactions take one business day to occur. Spot trade is the current market price and these transactions take place within two business days.

The forward trade is pre-specified exchange rate for a future date. This is an agreed date and based on the interest rate differential between the two currencies. There are also two analytical models that are used for forecasting the market movement: technical and fundamental. Technical is the study that uses graphical charts of previous currency prices. The fundamental deals wit the economic, political and other indicators as a way to predict the nations economical health. Economic health is an important part of currency valuation.