|
Forex Training - History of
the Forex Market
The Foreign Exchange market, also
referred to as the "Forex" or "FX" market, is the largest
financial market in the world, with a daily average turnover
of US$1.9 trillion -- 30 times larger than the combined
volume of all U.S. equity markets.
"Foreign Exchange" is the
simultaneous buying of one currency and selling of
another. Currencies are traded in pairs, for
example Euro/US Dollar (EUR/USD) or US
Dollar/Japanese Yen (USD/JPY).
There are two reasons to buy
and sell currencies. About 5% of daily turnover is
from companies and governments that buy or sell
products and services in a foreign country or must
convert profits made in foreign currencies into
their domestic currency. The other 95% is trading
for profit, or speculation.
For speculators, the best
trading opportunities are with the most commonly
traded (and therefore most liquid) currencies,
called "the Majors." Today, more than 85% of all
daily transactions involve trading of the Majors,
which include the US Dollar, Japanese Yen, Euro,
British Pound, Swiss Franc, Canadian Dollar and
Australian Dollar.
A true 24-hour market, Forex
trading begins each day in Sydney, and moves
around the globe as the business day begins in
each financial center, first to Tokyo, London, and
New York. Unlike any other financial market,
investors can respond to currency fluctuations
caused by economic, social and political events at
the time they occur - day or night.
The FX market is considered an
Over The Counter (OTC) or 'interbank' market, due
to the fact that transactions are conducted
between two counterparts over the telephone or via
an electronic network. Trading is not centralized
on an exchange, as with the stock and futures
markets.
Next >> |
