The simple answer is money / currencies. Forex trading is the simultaneous buying of one currency and selling another currency. Currencies are traded through a broker or dealer, and are traded in pairs, for example the euro and the US dollar (EUR / USD), or the pound sterling and the Japanese yen (USD / JPY). Because you do not buy anything material, can this type of trade can be confusing. Think of buying the Because you do not buy anything material, can this type of trade can be confusing. Think of buying the currency as buying a share in a particular country. When buying, the Japanese Yen, you are actually buying a stake in the Japanese economy, as the price of the currency is a direct reflection of what the market thinks about the current and future health of the Japanese economy status to tell. Thus, in general, the exchange rate of the currency against other currencies is a reflection of the state of the economy in this country, compared with the economies of other countries.
Currency rates are determined by a number of factors, the most important is the economic and political conditions in the exporting country. Political stability, inflation and interest rates, are all factors that influenced the price of any currency. In addition, governments can try to control the price of their currency either of causing a surplus in the market (to lower prices) or buying on a large scale (to raise prices). However, because of the sheer volume of foreign currency, it is impossible to force one to control the market for any length of time. Market forces will prevail in the long run, making FOREX one of the most open and fair investment opportunities available.
Unlike other financial markets like the New York Stock Exchange, there is no place nor a central bank of the Forex market. The currency market is a market between banks, due to the fact that the market is run entirely electronically, within a network of banks, continuously over a 24 hour period.
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