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What is FX?
FX stands for Foreign Exchange and is a rate used to calculate the one value of a currency relative to another.  For example $1 may be equal to £0.63.  This is important when considering the strength of global currencies relative to each other. From the example given above, it would be safe to say that the strength of the British Pound is stronger than the US-Dollar as it requires more dollar to the pound.

This is a useful tool in determining the strength of global economies in relation to each other however there are many more factors to consider such as economic scale, self-sufficiency, trade impact, etc.

The FX rate can be used as a spread-betting tool to generate minimal returns as the day-to-day changes are very low (+/- 0.001).  This is why it is mostly only associated with HFT (High-Frequency Trading) where a high volume of stock are traded many times to maximize the minimal returns per share.  However with HFT, there are stringent rules and regulations that govern the volume of stock that can be traded, especially with sovereign wealth funds, because a large enough volume could cause a flash-crash of a stock market.

FX can also be used to calculate the total value of an economy in a single global currency which nowadays is the US-Dollar.  However, it used to be the British Pound Sterling (GBP).

In the financial sector, FX is a tool that is regularly used, especially with global companies, and it is an important aspect of finance/economics

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