Authorized Forex Dealer

  

Forex means the trading of foreign currencies - the term is short for "foreign exchange." An authorized forex dealer is a financial institution that has received approval to make these kinds of currency trades.
The authorization to become an "authorized dealer" varies from place to place. For the U.S., this responsibility falls on an organization called the National Futures Association. The NFA is an industry group responsible for the self-regulation of the derivatives market. This includes most of forex trading since most foreign currency speculation takes place in the form of futures contracts, rather than direct investments.
So instead of literally buying Euro or Yen and then sitting on a bunch of cash, traders will buy derivatives contracts betting on the direction of currencies. These deals take place through financial services companies, which get NFA certification to become authorized forex dealers. Forex has nothing to do with foreskin. Not a good thing to mix up; so as a public service, we just put it out there.

Related or Semi-related Video

Finance: What is NYMEX?25 Views

00:00

Finance allah shmoop what is nynex Sounds like a snooty

00:07

new fusion restaurant in soho doesn't it Well in fact

00:11

it isn't the new york mercantile exchange or the merc

00:15

if you want to sound like an insider is just

00:18

a trading post which covers the basics in the land

00:21

of commodities like gold sugar natural gas cotton and corrupt

00:26

congressmen you can trade them now on a fantasy league

00:29

It's this building here in manhattan right along the hudson

00:32

perfect for anyone second guessing any of their investment decisions

00:37

although in reality there are now zero transactions done inside

00:41

the actual exchange This being the twenty first century and

00:45

all everything is elektronik Those recently is two thousand sixteen

00:49

If you prefer to get your hands feet and soul

00:51

dirty you could head on down to one north end

00:54

avenue hop into the pit there and scream and jest

00:58

iq yah late wildly along with a handful of others

01:01

on the physical trading floor Yeah listen to him scream

01:04

but because investors by and large traded in a trek

01:07

to the exchange with a few clicks on their mac

01:10

well everything is now entirely on the interwebs as they

01:15

call them in the midwest But while the physical location

01:18

today is just houses well webs Yeah you can actually

01:22

trade on the nymex in your underwear It's Kind of 00:01:25.003 --> [endTime] cool

Up Next

Finance: What is an Exchange Rate?
358 Views

What is an Exchange Rate? An exchange rate is what a domestic currency is worth in a foreign currency’s denomination and vice versa. An exchange...

Finance: What is a Derivative?
23 Views

A derivative of a security is a "something" which derives its value based on the performance of that security... either a put option or a call option.

Find other enlightening terms in Shmoop Finance Genius Bar(f)