It’s been a long time since I wondered about the true nature of the forex market—especially after seeing how many friends ask whether they should trade forex in Vietnam. Today, I decided to look into it in depth and share what I’ve learned.

First of all, the foreign exchange market isn’t something new in the world—it has existed for a long time and is closely tied to international trade. But in Vietnam, there are still quite a lot of people who don’t fully understand what the forex market is, or the legal issues surrounding it.

So, what is the true nature of the forex market? It’s a global, decentralized market where investors trade currency pairs. Unlike stocks that have centralized exchanges, forex operates through an OTC system via brokerage firms. The interesting part is that it has the highest liquidity in the world—according to 2020 statistics, the average daily trading volume reaches 6.6 trillion USD. Because the market is so large, it can’t easily be manipulated, which makes it relatively safe for investors.

In the past, forex was mainly a playground for financial institutions, central banks, and import-export companies—they used it to hedge against fluctuations in foreign-exchange prices. But now, as individual investors’ demand grows, what the true nature of the forex market is has become a question many ordinary investors are asking. Although individuals’ trading volume is still lower than that of institutions, the liquidity and volatility of this market are increasingly attracting more people.

As for legality in Vietnam, I have to admit this is a bit complicated. The government tightly manages foreign exchange reserves, so only licensed banks are allowed to trade forex. At present, no forex trading exchange in Vietnam has been legalized. However, the important point is: forex trading is not illegal if you do it through internationally licensed brokerage companies in countries where such trading is permitted. Only when you trade through a “brokerage company licensed by Vietnam” does it become an issue, because the Vietnamese government will definitely not license this.

When it comes to currency pairs, EUR/USD is dominant with more than 24% of daily trading. Next are USD/JPY (13.2%) and GBP/USD (9.6%). These pairs are traded heavily because of their stability and high liquidity. In addition, there are AUD/USD, USD/CAD, USD/CNY, USD/CHF, USD/HKD, EUR/GBP, USD/KRW—each pair has its own influencing factors.

Opening a forex trading account isn’t too complicated. You need to find a reputable brokerage firm (licensed by competent authorities), create an online account, choose the market you want to trade, and then open a buy or sell position. The final step is to set the position size, the take-profit target, and the stop-loss level.

There are five important pieces of news that affect the forex market, and I need to pay attention to them. First is central bank interest rate decisions—interest rates are the price of money. Second is GDP: when it is above or below expectations, it directly impacts currency prices. Third is CPI and inflation. Fourth is the unemployment rate (especially the U.S. ADP and NFP). Fifth is announcements from the U.S. Federal Open Market Committee (FOMC)—these meetings can cause major volatility, such as on 18/3/2015, when EUR/USD rose by 400 pips within a few minutes.

As for trading hours, forex operates 24 hours a day, 5 days a week. You can trade from platforms in New York (20:00-5:00), London (15:00-0:00), Sydney (4:00-13:00), and Tokyo (6:00-15:00). Each exchange’s open hours come with currency pairs that move more strongly—for example, AUD is lively during Sydney hours, and European currency pairs tend to be more active when London opens.

Final question: should you trade forex? If you’re a retail investor, forex is an attractive profit-making market. But the most important thing is to choose a reputable brokerage that is legally licensed in countries where forex trading is allowed. Then you can participate in the largest market in the world with peace of mind, without worrying about legal issues. In the end, what the forex market is at its core is just an investment tool—the key is how you use it.