1. What Is FOREX?
The commonly used term FOREX is simply an abbreviation for “foreign exchange.” You might also hear this referred to as FX or, as U.S. regulatory bodies refer to it, “retail off-exchange currency market.” The FOREX market is a worldwide, decentralized, over-the-counter financial market in which counterparties can facilitate the trading of currencies. The true FX market is composed of several electronic communication networks (ECNs) between banks, institutions, and speculators. As you will later learn, not all FOREX brokers provide their clients with access to an actual ECN marketplace; instead, their clients trade in a synthetic environment that merely appears to be a free market.