The Forex Market - What, When and Why?

The Forex Market - What, When and Why?

Forex, FX and the Forex market are some common abbreviations for the Foreign Exchange market. Actually it is the largest financial market in the world, where money is sold and bought freely. In its present condition the Forex market was launched in the seventies, when free exchange rates were introduced, and only the participants of the market determine the price of one currency against the other proceeding from demand and supply. As far as the freedom from any external control and free competition are concerned, the Forex market is a perfect market.



With a daily turnover of over trillions of dollars, the Foreign Exchange market conducts more than three times the aggregate amount volume of the United States Equity and Treasury markets combined. The Forex market is an over-the-counter market where buyers and sellers conduct foreign exchange business using different means of communication.



Unlike other financial markets, the Forex market has no physical location or central exchange. Since the Forex market lacks a physical exchange, the market trades continuously on a 24-hour basis, moving from one time zone to the next, across each of the world’s major financial centers every day. Trillions of dollars of foreign exchange activity takes place every day. From 1997 to the end of 2000, daily forex trading volume surged approximately from US$5 billion to US$1.5 trillion and more (according to various recent studies it has touched $1.7 trillion per day and dwarfs all other markets for trading in size and volume). It is really difficult, if not impossible; to determine an absolutely exact number because trading is not centralized on an exchange. But one thing is for sure that the Forex market continues to grow at a phenomenal rate.



Before the advent of Internet and ecommerce, only big corporations, multinational banks and wealthy individuals could trade currencies in the Forex market through the use of the proprietary trading systems of banks. These systems required as much as US$1 million to open an account. Thanks to advancements in online technology, today investors with only a few thousand dollars can have access to the Forex market 24 hours a day and around 5 ½ days of a week.



The Forex market is a nonstop cash market where currencies of nations are traded, typically via brokers called forex brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets while traders increase or decrease value of an investment upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events so it is also considered to be a highly volatile and fragile market too. Conditions of the Forex market never remain the same they changes every second.



The foreign exchange market dwarfs the combined operations of the New York, London, and Tokyo futures and stock exchanges. According to its size and scope it is many times larger than all other markets. Stats shows that spot transactions and forward outright Forex trading take place in the inter-bank market. 51% of the market is in spot Forex transactions, followed by 32% in currency swap transactions. Forward outright Forex transactions represent another 5% of this daily turnover, with options on ‘interbank’ Forex transactions making up another 8%. Therefore the inter-bank market accounts for 96% of the global foreign exchange market, with the remaining 4% being divided among all the global futures exchanges.



For traders, Forex trading provides an alternative to stock market trading. While there are thousands of stocks to choose from, there are only a few major currencies to trade (the Dollar, Yen, British Pound, Swiss Franc, and the Euro are the most popular). Forex trading also provides a lot more leverage than stock trading, and the minimum investment to get started is a lot lower. Add to that the ability to choose flexible trading hours (forex trading goes on 24 hours a day) and you have the reason why so many stock traders have flocked to day trade currencies.

thanks for the info TA trader
pl tell me how from bangalore i can trade in forex. im keen to open a account
can u pl suggest me some broker & what is the minimum investment required say 25,000 Rupees?? I have this question & not able to get any answer can u pl recoment a broker ph no?? & other details
thanks again
beda

Hi Beda

Interested in the most volatile markets in the world. Send me an email the same name at ***** and I would answer all of your querries.

Regards
James Alex
Trend is your FRIEND, FOLLOW it

Hi,

You have to understand that with 25 K you will be able to open a MINI Trading Account and if you trade on your own i.e.using your PC and Internet, then only there won't be any broking charges.
Regards,

Sean

Hi Sean,

Thanks for the information. Can you please point me to a website when I can get more info. What is a good bank to open a trading account with etc.

Thanks,

Mohan

mohanlate,beda
You can start at cmsforex.com, where i have my a/c. if you want more info google "forex broker" and you will find numerous brokers.Unfortunately there is no broker in India , so you will have to trade with some overseas broker only.to know more browse thro my thread .
http://www.traderji.com/forex/8910-d...0-20000-a.html
Happy trading

Hi all,

To all forex newbies i recommend not to caught in trap with undercapitalised account to trade forex like with 25k Rs just stay away if you dont have 3 to 4k $ to trade a mini with single lot and i have no aruguments with forex gamblers who says one can trade and build account with 25k Rs. Good lucks Good trading to all

Thanks dilse and amarnath for your help.

dear tatrader,

correct me if i am wrong...time and again central banks have intervened in the currency markets to teach speculators a lesson....so how come u say that they are absolutely free?