About Forex Market
Forex is a currency exchange market. It is arguably the most affordable yet rewarding segment of the financial market trading. 24 hours a day 5 days a week millions of traders throughout the globe benefit from the highest liquidity and trading volumes in the world. Forex has been one of the World's most revolutionary and innovative financial markets so far.
We offer a quick look at the history of Forex as well as an easy to understand introduction into it's very nature.
Forex (FOReign EXchange, FX) market is an inter-bank currency exchange market. In 1971 Forex market replaced the Bretton Woods system - rates were no longer fixed but floating. Basically Forex is a multitude of currency exchange transactions when counter-parties exchange specified sums of one currency to another at an agreed rate on a certain date. The exchange rate is determined by market forces - offer and demand.
Forex operates enormous amounts of money and gives an utmost freedom of opening and closing trading positions at current market quotations. High liquidity is highly attractive side for every investor because it enables the possibility of entering and exiting the market with any volume.
Forex is not a roulette because in the core of currency price fluctuations there are certain principles. First of all, currency price depends on its country's economic performance. Secondly, it is linked to preferences and expectations of the Forex players. It is all a subject of prognosis which is proved by the market analysis containing objective factors rather than casuality.
Brokerage houses are also playing an important role of contractor between large numbers of banks, funds, commission houses, dealing centers, etc.
Typical transaction volume in the interbank trading estimates in millions of US dollars. It is clear that such level is unreachable to a private investor, well, at least, to the vast majority.
What is traded in Forex market? The answer is simple: currencies of various countries. All the participants of the market buy one currency and pay another currency for it. Each trade in Forex market is performed through financial instruments - currency pairs (for example, EURUSD). Foreign exchange market is boundless, with the daily turnover reaching trillions of dollars; transactions are made via the Internet within 1 second.