Comparing Currencies
The world’s largest financial market is the Foreign Exchange with over three trillion traded everyday. If you want to make a comparison, then know that the Forex market is one hundred times larger than the Stock Exchange of New York. It is also triple the size of the US Treasury and Equity markets combines.
This is a over the counter market meaning that there is no central trading arena. Transaction are done either online or by phone but can be done through a decentralized network of some banks, brokers, multinational corporations and traders of currencies. The New York Stock Exchange has its central location.
Forex trading is when you buy the currency of one country and sell another and this takes place at the same time. There are major currencies: the British Pound GBP, the Euro EUR, the Swiss Franc CHF, and the Japanese Yen JPY and they are all traded against the US dollar. If the US dollar is not part of the trade pairs, these types of trades do not happen very often. The smallest unit of currency from any country is the pip. In many of the world’s currencies, the pip represents the fifth digit, or the fourth after the decimal point. In dollars, this is equal to one-hundredth of a penny.
