Introduction to the Forex Market
The Forex is the abbreviation for Foreign Currency Exchange Market. "Foreign Exchange" is actually trading of one currency against another, called as pairs. The most traded pair is as expected, EUR/USD & USD/JPY, now famous for Yen Carry trade. The value of each country's economy is reflected in its currency, so trading FX is like trading the worth of countries.
There are more than 5000 International Banks and many small and large traders who participate in it. Forex (FX) with a daily average turnover of around US$ 4 trillion, comparing this with less than $10 billion in the U.S stock markets; its the leading financial market in the world.
Established in 1971, the Forex market is a cash inter-bank or inter-dealer market when floating exchange rates began to trade. Traders in Forex can be categories into; Central & Commercial banks, Financial Institutions & Brokerage Houses, Corporate, & Individual home-based traders. Trading by individuals and organizations accounts for up to a 25% of volume. Rest includes trading by major corporations and central banks for hedging against currency price movements or to convert profits. With advent of technology, the currency trading has expanded from floors to Desktop & laptops. The Internet has facilitated individuals in an efficient low cost manner to trade next to the biggest banks in the world, with almost same pricing and execution.
This is a round the clock market starting from Sunday 5:00 PM to Friday 5:00PM. Day begins from Sydney and moves around the globe. So traders can take position responding to currency fluctuations caused by economic, social and political events at any time of the day in real time, thus increasing the scope of their profit.
Almost 85% of transactions involve trading of the 7 "Major" currencies, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. The best trading opportunities for traders are with the pair between the dollar and the four major currencies Euro, British Pound, Swiss Franc and Japanese Yen.
The Forex is an OTC (Over The Counter) market & can be traded similar to equities using a fundamental and technical analysis.
Above article is for information purpose & should not be treated as an advice or advertisement for Forex Trading.
Article is copy protected & should not be duplicated for any reasons.
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