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.
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Finance: What is a Derivative?23 Views
finance a la shmoop what is a derivative? well it's derived it's a something taken
from something else like a derivative of hot weather is thirst a derivative of [Girl takes sip of glass of water on a beach]
hunger is well you know crankiness that's diva thing you get there...
derivative of a 1/32 quarterback rating in the NFL is like serious wealth yeah
yeah discount double shmoop yeah look for it be on there with aaron
and a derivative of a stock or bond or other security is a something which
derives its value based on the performance of that underlying security
there are basically two flavors of derivative put options ie the right to [Ice cream flavors appear]
sell a security at a given price over a given time period and a call option, ie
right to buy a security at a given price over a given time period
well the price of that option is derived from the price of the security and a few
other factors like strike prices and duration and all that stuff
colonel electric the downgraded new version of General Electric is trading [Colonel Electric appears in a suit]
for 25 bucks a share a derivative of its share price is sold in the form of a
call option with a $30 strike price expiring about 90 days from now on the
third Friday of the end of that month well investors pay a price albeit
probably a small one for the right to then pay 30 bucks a share for colonel [Call option appears for colonel electric]
electric at any time in the next 90 ish days until that option expires making the bet
that the stock will go well above 30 bucks a share in that time period that
call option is thus a derivative of the colonel electric primary stock price got
it if you really want to get personal well here's the ultimate form of
derivative [Baby laying down]
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