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The biggest money market in the world, Foreign
Exchange or Forex or FX is a platform where money is sold and bought freely
between buyers and sellers. With over $1.5 trillion USD being traded daily,
the foreign exchange market has now become a market which is open to trading
by an average investor as much as it is open to a high investor.
Launched over three decades back, in the early seventies, Market Forex
introduced free exchange rates worldwide, according to which, the price of
the currencies was determined on the basis of demand and supply only. No
external regulatory authority was and still is, allowed to set or fix prices
or rates. The power of setting or fixing a price for each currency is with
the participants of the market, the buyers or the sellers, who decide the
price of one currency against the other. Forex Market is also free and
independent from all or any outside control and is open to all, as far as
free and fair competition is concerned, making it the perfect market to
invest in.
Today, Forex market deals in over hundred times the every day trading done
in the New York Stock Exchange. The Forex market is an over-the-counter
market in which buyers and sellers trade through different means of
communication such as telephone, fax or internet network rather than being
physically present on the exchange location. The major reason for this is
that contrasting to other money markets, the Foreign Exchange market neither
has a physical location nor any central exchange. And it is this lack of
physical exchange, which enables the Forex market to trades incessantly, 24
hours a day, going from one time zone to the other, from the world’s one
major economic center to another, day after day. Beginning since 1997 till
date, more than a trillion dollars of foreign exchange activity has been
taking place at Forex, day after day.
The every day forex trading quantity escalated
from US$5 billion to US$1.5 trillion approximately. At this pace, it can be
said for sure that the Forex market continues to grow at an exceptional
rate. Going back to the time when Foreign Exchange market had been launched,
before the Internet geared up its popularity, Forex was only limited to big
companies, transnational or global banks and affluent corporate individuals,
who could trade currencies in the market through the bank-owned trading
systems. During that time, opening an account for trading required a deposit
of as much as US$1 million. It was only with the advent of Internet and
online technology, that today, investors can open an account as well as
trade successfully, with only a few thousand dollars.
Brokers are a significant part of this trading industry. It is only because
of these Forex Brokers, that this Foreign Exchange market is a nonstop cash
market, with a continuous buying and selling of currencies of different
nations. Forex market conditions are highly unpredictable in nature and
change every second, with fluctuation in price being the only constant
factor in this trading. This is the main reason why, at times, Forex is also
known as a highly fickle and fragile market. Forex today, provides a great
substitute to the stock market trading for the traders and investors.
Although Stock Exchange provides a far larger variety of stocks to trade in,
Forex offers only a few major currencies to trade for, where in the US
Dollar, Yen, British Pound, Swiss Franc, and Euro, are the most popular
ones. Trading such big currencies is definitely more exciting for the
investors than the stocks, and it can be seen that more and more traders and
investors are now turning towards Currency trading to get the real thrill of
the trading business.
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