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Creator
Johnsons David -
Revealed
October 3, 2011 -
Phrase rely
338
Foreign exchange (Forex) is the largest market in the world for trading currencies. Individuals, companies, and nations can all participate. Forex trading includes trading currency futures and the spot Forex market, which have subtle differences.
Currency futures, introduced in 1972 at the Chicago Mercantile Exchange, serve two primary purposes: they help businesses and individuals manage exchange rate risks in international transactions, and they allow investors to profit from fluctuations in exchange rates.
In currency futures, prices are established at contract signing and the actual exchange occurs on a set future date (typically no more than 3 months later). Most traders close their positions before the settlement date.
In the spot FX market, the exchange rate is set at the time of trade, and the currency pair is exchanged either immediately or within a short timeframe (usually within 2 days). Forex trading happens over-the-counter (OTC), not on a regulated exchange. For instance, exchanging currency at a bank is an OTC trade.
Whether you’re active in spot Forex or looking to speculate, Forex holds many opportunities with high risk involved. Consider reaching out to a Forex management and investment research firm for guidance and strategies to mitigate risks in this volatile market.
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