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Forex market is the international foreign exchange
market. It gets its name from the English shortening FOReign Exchange –
foreign exchange operations. Forex market is one of the youngest
financial markets (Forex has been functioning since the 70's of the last
century). However, it is the largest in volumes and the most
fast-growing market. The daily trading turnover on Forex amounts to
about 4 trillion US dollars, which by 30 times exceeds the joined volume
of all stock markets in the USA.
Like any other market, Forex trades certain goods. In case of foreign exchange market these goods are national currencies of different countries.
The key factor of currency rate movement is the need of state bodies as well as commercial companies to convert profits from the sale of goods and services abroad into its national currency. It accounts for 5% of the foreign exchange market turnover. The remaining 95% provides currency traders speculative capital aiming at extracting profit from currencies rate movement.
Distinctive feature of the foreign exchange market is its stability. It is a well-known fact that the main threat for any financial market is its meltdown, the fall of the stock index. However, unlike other markets (stock and commodity markets) Forex is defended owing to the specific of its commodity - currency. If shares devalue it is a financial collapse. If the dollar falls, this means that another currency has become stronger, market movement becomes more active. This is a good chance to generate additional profit for a trader. Unique stability of the Forex market lies in this Forex peculiarity: currency is one of the most liquid and reliable trading instrument among all existing.
The speculators are generally interested in the most common (most liquid) currencies which are "basic or major". At the moment, more than 85% of all deals involve basic currencies including: the US dollar (USD), the Japanese yen (JPY), the Euro (EUR), the British pound (GBP), the Swiss franc (CHF), the Canadian dollar (CAD) and the Australian dollar (AUD).
Forex is available everywhere. Due to the Internet, you may conclude deals with the clients who are in the other part of the world. As it was mentioned above, exchange market always gives you an opportunity to make profit, i.e. rates fluctuations of this or that size take place several times a day. Fluctuations of the currency rates, your intellectual potential, and new technologies allow to build high profitable business right now. On the back of it, ECN broker services become more topical giving the traders an opportunity to operate against each other by means of setting a price within the system.
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Security matters: Trading on Forex via Internet you have a strong guard of your funds due to InstaForex top-notch security system. |
Another indisputable plus of Forex market is a simple way to enter the market. Finding a reliable broker is not difficult since there is a great many of them on the market. The rest depends only on the person who decides to join Forex.
* In the ‘70s the
world familiarized with Forex when the President of the USA Richard
Nixon announced about the decision to reject the gold standard on August
15, 1971. This report ruined the system of stable currency rates and
commemorated as the culmination of the postwar Bretton Woods system
crisis.
