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What Is Forex Currency Trading

 

Forex (FOReign EXchange, FX) market is an inter-bank currency exchange market. In 1971 Forex market replaced the Bretton Woods system - rates were no longer fixed but floating. Basically Forex is a multitude of currency exchange transactions when counter-parties exchange specified sums of one currency to another at an agreed rate on a certain date. The exchange rate is determined by market forces - offer and demand.


The overall volume of transactions in the global currency market is constantly growing. This is due to the development of international trade and abolition of currency restrictions in many countries. Daily turnover of conversion transactions in the world is estimated at $4 trillion. About 80% of all transactions are speculative transactions with intention to derive profit from jobbing on the exchange rate differences. Jobbing attracts numerous participants, both financial institutions and individual investors.


The global Forex market has significantly changed with the maximum intrusion of the information technologies into the sphere. Once a mystical mega market where privileges were given to grand banks only, Forex has become accessible for everyone and everywhere. Today, trading through electronic systems is preferred by banks like Deutsche Bank, Standard Chartered Bank, Union Bank of Switzerland, Barclays Bank, the daily transactions volumes of which exceeds billions of US dollars.


The main and important feature of the global Forex market is its stability. Everyone thinks that one of the negative properties of the stock market is its unexpected falls, which has been confirmed very evidently during the recent economical crisis. However strange it may seem, Forex money market is always stable and never falls, unlike the stock market. If the divides become worthless - it's a negative impact for the both sides - issuer and investors.


If one currency falls down, it means that another one gets stronger. For example, in late 2008 - early 2009 the Dollar has increased in 10 % against all other currencies. Still the money market did not collapse and trades continue normally. This is the stability and strength of this market. Currency trading is an absolutely liquid service and there is always possibility on negotiating. The main benefit of the currency market is that one can achieve a stable success with the power of knowledge of selling and buying foreign currencies.


Forex is around the clock. It is not connected to any exact timetables as trade takes place amongst banks located in different parts of the World. The volatility of exchange rates is so enormous that major changes with currency pairs can happen every minute. That’s why the important deals can occur every minute.


If the Forex trader elaborates a right and reliable trading techniques and strategy, it can turn into the profitable business. So, in the Forex market competition will increase and nobody able to compete. No wonder why commercial banks and other financial institutions, related to Forex business, buy expensive electronic equipments and special programs, maintain a big staff of traders for working in different niches of the currency market.


The initial cost of getting into the Forex business is really minimal. But everybody should have basic knowledge about Forex, a PC and high-speed internet connection to open a trading account and make a deposit. There is no other business which requires such a little amount of money for starting business. It is very easy to start than to find a reliable Forex broker


To have success in the Forex all depends from trader’s professional qualities. International monetary system has gone a long way over the millennium of human history, but uncertainly there are a lot of positive changes. Amongst these changes of the World's monetary system, there are two main ones:

  1. The money is fully separated from any tangible media or equivalent.
  1. Powerful information and telecommunications technologies made it possible to combine monetary and banking systems of different countries into a single global financial system that has no limits.

 

 

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