Forex (Foreign Exchange) is the international financial market used for trade of world currencies. It has been working since 70s of the 20th century - from the moment when the biggest world nations decided to switch from fixed exchange rates to floating ones.
Daily volume of Forex trade exceeds 4 trillion United States dollars, and this number is always growing.
Main currency for Forex operations is the United States dollar (USD).
Main Forex market participants:
- Central banks of countries;
- Commercial banks;
- Investing banks;
- Brokers, dealers;
- Pension funds;
- Insurance companies;
- International corporations;
- Individuals.
Unlike stock exchanges, Forex market doesn't have any fixed schedule or operating hours - it's open 24 hours per day, 5 days per week from Monday to Friday, since buy/sell orders are performed by world banks any time during the day or night (some banks even work on Saturdays and Sundays). Just like any other exchange, Forex market is driven by supply and demand of a particular tool. For instance, there are buyers and sellers for "Euro vs US dollar".
Exchange rates at Forex are changing constantly, and fluctuations may happen many times per second - this market is very liquid.
Exchange rates are influenced by:
- Economical factors (economical indicators of countries at the moment, politics of Central banks, changing interest rates, behaviour of importers and exporters, etc);
- Political factors (speeches of political leaders, president elections, etc);
- Market participants' mood and feelings, their expectations, rumours, etc;
- Force-major events (terroristic acts, accidents, catastrophes, etc).
Nevertheless, Forex market is much more stable than stock exchanges - it is not subject to huge surges, even if one currency is declining, another one is improving.
One of big advantages of the market is its' close relation with latest information technologies. Clients from different parts of the planet may connect to Internet and start trading. Even big banks tend to use electronic trading - it's the most common way of trading now. At this moment, Forex is at the rapid developing phase, and it's expected to grow more and more in the future.
Some of the advantages of Forex market over stock markets and/or other equities include:
- Traders can make profits both on declining and developing economies;
- Traders can make very short-term orders - with some other markets there are certain regulations;
- Thanks to retail centers like "Forex 4 You", it's much easier to join Forex market - virtually no minimum capital, quick registration, etc;
- Market is not regulated;
- There are no broker commissions or they are very low;
- Much higher leverages are provided;
- Market works non-stop 24 hours.
Showing posts with label forex trading. Show all posts
Showing posts with label forex trading. Show all posts
Wednesday, July 7, 2010
Forex Market :- forex history
Historically the value of goods was expressed through some other goods, for example - a barter economy where individuals exchange goods. The obvious disadvantages of such a system encouraged establishment of more generally accepted and understanded means of goods exchange long time ago in history - to set a common scale of value. In different places everything from teeth to jewelry has served this purpose but later metals, and especially gold and silver, were introduced as an accepted means of payment, and also a reliable form of value storage.
Originally, coins were basically minted from the metal, but stable political systems introduced a paper form of IOUs (I owe you) which gained wide acceptance during the Middle Ages. Such paper IOUs became the basis of our modern currencies.
Before First World War most central banks supported currencies with gold. Even though banknotes always could be exchanged for gold, in reality this did not happen that often, developing an understanding that full reserves are not really needed.
Sometimes huge supply of banknotes without gold support led to giant inflation and hence political instability. To protect national interests foreign exchange controls were introduced to demand more responsibility from market players.
Closer to the end of World War II, the Bretton Woods agreement was signed as the initiative of the USA in July 1944. The Bretton Woods Conference rejected John Maynard Keynes suggestion for a new world reserve currency in favour of a system built on the US dollar. Other international institutions such as the IMF, the World Bank and GATT (General Agreement on Tariffs and Trade) were created in the same period as the emerging victors of WW2 searched for a way to avoid the destabilising monetary crises which led to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that partly reinstated the gold standard, fixing the US dollar at USD35/oz and fixing the other main currencies to the dollar - and was intended to be permanent.
The Bretton Woods system came under increasing pressure as national economies moved in different directions during the sixties. A number of realignments kept the system alive for a long time, but eventually Bretton Woods collapsed in the early seventies following president Nixon's suspension of the gold convertibility in August 1971. The dollar was no longer suitable as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.
The following decades have seen foreign exchange trading develop into the largest global market by far. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.
But the idea of fixed exchange rates has by no means died. The EEC (European Economic Community) introduced a new system of fixed exchange rates in 1979, the European Monetary System. This attempt to fix exchange rates met with near extinction in 1992-93, when pent-up economic pressures forced devaluations of a number of weak European currencies. Nevertheless, the quest for currency stability has continued in Europe with the renewed attempt to not only fix currencies but actually replace many of them with the Euro in 2001.
The lack of sustainability in fixed foreign exchange rates gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates, in particular in South America, looking very vulnerable.
But while commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have found a new playground. The size of foreign exchange markets now dwarfs any other investment market by a large factor. It is estimated that more than USD 3,000 billion is traded every day, far more than the world's stock and bond markets combined.
Originally, coins were basically minted from the metal, but stable political systems introduced a paper form of IOUs (I owe you) which gained wide acceptance during the Middle Ages. Such paper IOUs became the basis of our modern currencies.
Before First World War most central banks supported currencies with gold. Even though banknotes always could be exchanged for gold, in reality this did not happen that often, developing an understanding that full reserves are not really needed.
Sometimes huge supply of banknotes without gold support led to giant inflation and hence political instability. To protect national interests foreign exchange controls were introduced to demand more responsibility from market players.
Closer to the end of World War II, the Bretton Woods agreement was signed as the initiative of the USA in July 1944. The Bretton Woods Conference rejected John Maynard Keynes suggestion for a new world reserve currency in favour of a system built on the US dollar. Other international institutions such as the IMF, the World Bank and GATT (General Agreement on Tariffs and Trade) were created in the same period as the emerging victors of WW2 searched for a way to avoid the destabilising monetary crises which led to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that partly reinstated the gold standard, fixing the US dollar at USD35/oz and fixing the other main currencies to the dollar - and was intended to be permanent.
The Bretton Woods system came under increasing pressure as national economies moved in different directions during the sixties. A number of realignments kept the system alive for a long time, but eventually Bretton Woods collapsed in the early seventies following president Nixon's suspension of the gold convertibility in August 1971. The dollar was no longer suitable as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.
The following decades have seen foreign exchange trading develop into the largest global market by far. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.
But the idea of fixed exchange rates has by no means died. The EEC (European Economic Community) introduced a new system of fixed exchange rates in 1979, the European Monetary System. This attempt to fix exchange rates met with near extinction in 1992-93, when pent-up economic pressures forced devaluations of a number of weak European currencies. Nevertheless, the quest for currency stability has continued in Europe with the renewed attempt to not only fix currencies but actually replace many of them with the Euro in 2001.
The lack of sustainability in fixed foreign exchange rates gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates, in particular in South America, looking very vulnerable.
But while commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have found a new playground. The size of foreign exchange markets now dwarfs any other investment market by a large factor. It is estimated that more than USD 3,000 billion is traded every day, far more than the world's stock and bond markets combined.
forex :- Inventories released by the US
The Wholesale Inventories released by the US Census Bureau captures sales and inventory statistics from the second stage of the manufacturing process. The sales figures do not move the market as they do not reflect personal consumption while wholesale inventories may change the aggregate inventory profile which can influence the GDP forecast. A high inventory suggests economic slowing in the US, that is seen as negative (or bearish) for the USD, whereas a low reading is seen as positive (or bullish).
forex and profit :- making profit using forex :- How do I make a profit using Forex?
Forex and profit :- making profit using forex :- How do I make a profit using Forex?
Again, the answer is obvious: just as with any market, you make money by buying cheaper and selling more expensive! Buy for less, sell for more! All you do is take advantages of fluctuations in the relative values of world currencies. Each currency's value changes every day in the currency exchange market. All you have to do is use these fluctuations to your advantage.
forex:- what exactly is Forex
It's a market. That simple.
More precisely, FOREX is a currency trading market, and it's one of the largest and most rapidly developing markets on the planet. Over 2.5 trillion dollars are turned over on Forex every single day. That's more than 100 times more than the amount turned over daily on NASDAQ. If you're intrigued, you can click here and get more detailed market information from Forex4you.
So, what's a market? Simple: it's a place where goods are traded. Forex is no different, but with one little twist: the goods traded on Forex are the national currencies of the world's countries. For example, on Forex you might pay in American dollars and buy some Canadian dollars. Or, you could sell your Euros for Japanese Yen. There's nothing more to it than that.
More precisely, FOREX is a currency trading market, and it's one of the largest and most rapidly developing markets on the planet. Over 2.5 trillion dollars are turned over on Forex every single day. That's more than 100 times more than the amount turned over daily on NASDAQ. If you're intrigued, you can click here and get more detailed market information from Forex4you.
So, what's a market? Simple: it's a place where goods are traded. Forex is no different, but with one little twist: the goods traded on Forex are the national currencies of the world's countries. For example, on Forex you might pay in American dollars and buy some Canadian dollars. Or, you could sell your Euros for Japanese Yen. There's nothing more to it than that.
Subscribe to:
Posts (Atom)
