The
Forex Market or market currency trading is by
far the largest market in the business world and includes currency
transactions carried out both by major banking institutions, central
banks, speculators, multinationals, as by the financial markets and
institutions.
The
place where is done the exchange of currency by another is
named Foreign
Exchange Market (ForexMarket).
Currently, the volume of
business Forex Market reached 1.9 trillion dollars daily average, and
it is a rising market since the Financial Times predicts a growth of
200% over the next 3 years due to the arrival of fund managers and
pension funds.
The
currencies
The
existence of a large foreign exchange market is a fact that do not
quite understand the investors. But if we use simple terms to
understand, this type of market is easy and can open up perspective as
a fantastic investment vehicle for investors.
Whether
you want it or not, and indeed may be unwittingly playing a role in the
Forex market. The mere fact of having money in your pocket makes you a
holder of foreign currency. The fact that your bank account and your
assets are valued in pounds makes you an investor in that currency. The
fluctuation in the prices of different currencies in the market changed
the value of your assets. In other words, even if you have some of your
accounts denominated in foreign currency, you must consider the value
of your wealth is linked to the appreciation of the currency of the
country in which you invested.
Here is a list of the most
popular currencies with their symbols:
| symbols |
Country |
Currency |
| USD |
USA |
Dollar |
| EUR |
Euro Aera |
Euro |
| JPY |
Japan |
Yen |
| GBP |
Great Britain |
Pound |
| CHF |
Switzerland |
Swiss
Franc |
| CAD |
Canada |
Dollar |
| AUD |
Australia |
Dollar |
| NZD |
New Zealand |
Dollar |
The Birth of Forex
Having
in your possessions euros, you have opted not to be invested in another
currency.
Your purchases of shares, bonds and all kinds of financial products as
well as your bank balances represent a commitment from you on the
future of the pound. As the value of it varies permanently, this can do
vary dramatically the overall value of your assets.
When we accept this, we understand that some investors benefit from
these changes in the course of currencies to increase the value of
their capital. Since the establishment of exchanges market it has
undergone many and deep changes. During years, following the agreements
of " Bretton Wood's ", the western world decided to build a system in
which the price of currencies was strictly connected to the amount of
the golden reserves of the central banks of every country.
During the summer of 1971 President Nixon decided to abandon the system
of the ''Gold Standard'' and created a floating exchange rate for the
dollar.
Today supply and demand for each currency determine its course. The
lifting of barriers that represented the communist regime in the East
countries and the development of emerging economies has created new
opportunities for investors.
The Forex a worldwide market
The
recent development of international trade has made the economies more
interdependent. Conveyed by the media, information on economic data of
all countries arriving on a continuous basis.
This concerns the inflation rate, unemployment rates, changes in rates
of growth, but this may involve unexpected events like natural
disasters, wars or terrorist attacks that immediately affect the value
of currencies that may be affected by these facts. The course of the
Pound fluctuates permanently against other currencies of other
countries.
The development of Internet at the world level allowed the foreign
exchange market to form itself and to become the market the most
important in the world. The forex market is by its size, the guarantor
of a perfect liquidity and by far superior to all the markets known in
the world.
Banks:
the first speakers of the forex
The foreign currency market is primarily an interbank market. The
currency market is not a ''market'' in the traditional sense where we
understand it because there is no geographically centralized place
where concentrates the activity.
The
transactions are conducted over the telephone and through computer
communications systems through thousands of points around the world.
The speakers that dominate this market are institutional, they provide
the assurance to the donors of order that the negotiations will be
concluded and resolved in safety. This market segment generates a
considerable part of the whole of the transactions which are done on
the currencies. The transactions between the institutional produce the
volumes of sales turnover the most important and do thus foreign
exchange market the most liquid of all the markets of the world.
Forex: the largest market in the world
The
foreign exchange market is traditionally open to banks and large
financial institutions. These large groups have achieved successful
profitable operations in view of their positions and their knowledge of
rules of the market.
Today the market is open to other stakeholders, brokers, currency
traders, portfolio managers and individual investors. All this became
possible through real-time by interconnection of all stakeholders and
through the Internet.
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