The Forex market is a global market for the exchange of currencies internationally. This includes both international currencies and ones local to certain countries. The Forex trade is divided into two possible parts: institutional and retail.
The majority of Foreign exchange trading happens institutionally. The largest traders are international and local banks that exchange currencies between each other. Institutional Forex also includes large capital funds and companies that get involved in Foreign exchange for the sake of creating income and some extra profit for themselves.
Retail trading is what all of the individual Forex traders are doing. Some institutions participate in retail trading as well, but no individual trader (unless they are incredibly high net worth individuals) will be able to participate in the Interbank Network or in large scale Forex trading. Retail trading by individual traders is done through the use of trading platforms offered by various brokers around the world. These brokers offer their services for compensation in the shape of fees imposed upon traders either through spreads or through other means, though the preferred method for most traders is the spreads method.
An individual retail trader will find themselves trading with one of these retail brokers, with capital ranging from $100 to higher numbers. They will be trading with currency pairs – such as USDAUD or USDCAD or some other less popular currency pairs. The currency pairs are a way of exchanging one currency pair for another over time in a way that makes a profit. Most brokerages will offer a limited amount of currency pairs.
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