Trading currencies is the act of making predictions based on minuscule variations in the global economy and buying and selling accordingly. The exchange rate between two currencies is the rate at which one currency will be exchanged for another. Forex traders use available data to analyze currencies and countries like you would companies, thereby using economic forecasts to gain an idea of the currency's true value.
The essence of technical analysis is that it attempts to forecast future price movements in the FX market by thoroughly examining past market data, particularly price data. The idea is that history may repeat itself in predictable patterns. In turn, those patterns, produced by movements in price, are called Forex signals. This is the goal of technical analysis - is to uncover current signals of a market by inspecting past Forex market signals. This may help traders perform daily Forex predictions. In addition, prices move in trends. Technical analysts are inclined to believe that price fluctuations are not random, and are not unpredictable by nature. Once a certain type of trend is established, it is likely to continue for a certain period of time.
Individual retail speculative traders constitute a growing segment of this market. Currently, they participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated in the US by the Commodity Futures Trading Commission and National Futures Association, have previously been subjected to periodic foreign exchange fraud. To deal with the issue, in 2010 the NFA required its members that deal in the Forex markets to register as such (I.e., Forex CTA instead of a CTA). Those NFA members that would traditionally be subject to minimum net capital requirements, FCMs and IBs, are subject to greater minimum net capital requirements if they deal in Forex. A number of the foreign exchange brokers operate from the UK under Financial Services Authority regulations where foreign exchange trading using margin is part of the wider over-the-counter derivatives trading industry that includes contracts for difference and financial spread betting.
One unique aspect of this international market is that there is no central marketplace for foreign exchange. Rather, currency trading is conducted electronically over-the-counter (OTC), which means that all transactions occur via computer networks between traders around the world, rather than on one centralized exchange. The market is open 24 hours a day, five and a half days a week, and currencies are traded worldwide in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney - across almost every time zone. This means that when the trading day in the U.S. ends, the forex market begins anew in Tokyo and Hong Kong. As such, the forex market can be extremely active any time of the day, with price quotes changing constantly.