Forex Earnings: Forex, FX and the Forex market are some common abbreviations for the currency market. Actually, it is the world’s largest financial market, where money is sold and bought freely. In its present condition FOREX market it started in the seventies, when free exchange rates were introduced, and only market participants determine the price of one currency against the other proceeding from demand and supply. As for freedom from any external control and free competition are concerned, the Forex market is a perfect market.
With a daily turnover of more than billions of dollars, the currency market performs more than three times the total volume of US RV and Treasury markets combined. The Forex market is an OTC market where buyers and sellers to conduct transactions in foreign currency using the different media.
Unlike other financial markets, the Forex market has no physical location or central exchange. Since the Forex market has no physical exchange, the market continuously operate 24 hours a day, from one time zone to another, through each of the major financial centers worldwide, every day. Trillions of dollars of foreign exchange activity takes place every day. From 1997 to late 2000, the daily volume of foreign exchange trading increased about 5 US dollars million US $ 1.5 trillion and more (according to several recent studies it has touched $ 1.7 trillion per day and dwarfs all other markets for trading in size and volume). It is very difficult, if not impossible, to determine an absolutely exact number because trading is not centralized on an exchange. But one thing is certain, that the currency market continues to grow at a phenomenal rate.
Before the advent of the Internet and electronic commerce, only large multinational corporations, banks and wealthy individuals could trade currencies in the Forex market through the use of systems of proprietary trading by banks. These systems require much as US $ 1 million to open an account. Thanks to advances in online technology, today investors with only a few thousand dollars can have access to the forex market 24 hours a day and about 5? days a week.
The Forex market is a nonstop cash market where currencies of nations are traded, typically via brokers called forex brokers. Foreign currencies are constantly and simultaneously bought and sold in local and global markets while traders increase or decrease the value of an investment in currency movements. Foreign exchange market conditions can change at any time in response to events in real time so it is also considered to be a very volatile and fragile market too. Forex market conditions are never the same changes every second.
The foreign exchange market dwarfs the combined operations of New York, London and Tokyo futures and stock exchanges. According to its size and scope it is much larger than all other markets. Statistics show that cash transactions and operations of fixed-term change taking place in the interbank market. 51% of the market is in spot forex transactions, followed by 32% in currency swap transactions. Currency transactions Fixed-term represent another 5% of this daily turnover, with options on currency transactions ‘Interbank’ forming another 8%. Therefore, the inter-bank market accounts for 96% of global foreign exchange market, with the remaining 4% is divided among all the global futures exchanges.
For traders, Forex trading is an alternative to the stock market. Although there are thousands of stocks to choose from, there are only a few major currencies to trade (dollar, yen, sterling, Swiss franc and the euro are the most popular). Forex trading also provides leverage much more than stock trading, and the minimum investment to start is much lower. Add to that the ability to choose flexible trading hours (forex trading works 24 hours a day) and you have the reason why so many stock traders have flocked to the daily trading currencies is added.