What is Forex ?
Forex is an interbank
market that was created in 1971 when
international trade transitioned from
fixed to floating exchange rates. Since
then the rates of currencies relative to
each other are determined by the most
obvious means which is the exchange at a
mutually agreed rate.
This
market surpasses the others in its
volume. For example, the daily turnover
of world securities market is estimated
at $300 billion, while Forex approaches
1 to 3 TRILLION US dollars in the same
amount of time.
However, Forex is not a market in a
traditional sense. It doesn't have a
fixed location of the trading floor as,
for example, futures market does. The
trading is done over the telephone and
at the computer terminals in hundreds of
banks around the world simultaneously.
Futures and securities markets have one
more significant feature distinguishing
them from Forex, and at the same time
restricting them. The trading is
suspended at the end of each day and
resumed only next morning. Thus, should
certain significant developments occur
in the USA, the opening of Russian
market next morning could quite surprise
you, if you're trading there.
Forex
is open 24 hours a day, and the currency
exchange operations are maintained
throught working days of the week.
Almost every time zone (London, New
York, Tokyo, Hong Kong, Sydney) has
dealers willing to quote currencies.
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