Similar to the stock market, the Forex market is also a financial market allowing traders and investors to benefit from market trends. Only over the past couple of years has the Forex market gained popularity among investors as it was previously thought to be classed as only a professional’s arena. To date the Forex market accommodates a daily trade of over $3 trillion, 10 times larger than any stock market. Due to the mass quantity of volume that trades hands per day, problems of liquidity (a situation where a trader wants to sell an asset and there is no one to buy) never happens. The Foreign exchange (currency or FX) market is available where ever currencies are being traded one against another.
Forex operates through a global network of banks, corporations and individuals trading one currency for another. As Forex is available on numerous exchanges across the globe, traders and investors alike can take advantage of this market, which is open on a 24 hour basis.
Since 1971 trading volume has increased rapidly on the FX market as President Nixon allowed a float free environment on the USD. Today participants range from small investors to large ones, all benefiting from this active market
The major participants in the market are as follows:
· Banks
· Central banks
· Hedge funds
· Investment firms
· Retail Forex brokers
· Large investors
While the main trading centers are in London, New York, Tokyo, Hong Kong and Singapore, other banks and retail brokers can participate throughout the world allowing traders to benefit from currency fluctuation. As currencies are traded throughout the world, the vast transactions prevent inside information, making the Forex market the most transparent market worldwide.
