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The Forex Exchange Market by Jareth Carter http://www.forexjoy.com Also known as FX, Forex is an abbreviation for the foreign exchange market and is the largest market in the world. A detailed study on the Forex market in 1998 by the International Bank of Settlements (IBS) showed a daily global turnover of $1.4 trillion. This represents an 80 percent increase over daily global turnover in 1992. Such a huge market is obviously dominated by massive financial institutions and commercial banks, investment banks, money centers and central banks all play a significant role in the Forex market. Huge single transactions of $200 to $500 million are not uncommon in such a marketplace. Now you know that the Forex market is global but if you are looking for the main currency exchange center look no further than Great Britain. Great Britain~s prime location makes it perfect for both Asian and American markets. In fact, it accounts for 30% of the daily activity in the market alone. Even the United States falls second to Great Britain. The Forex market uses global currencies to exchange and trade in pairs. The first currency is always called the base currency. The US dollar is the base currency for almost all currencies except the Australian, the Euro and the British. The Forex is an over the counter market meaning that there is no exchange floor as there is with stocks, bonds, futures and options. But rather, trades occur directly between market operators like stock brokers and those placing the order (the customer). Trades for stocks are processed via an electronic network or over the telephone once again broker to broker or broker to customers. Trades occur in the major financial centers which are located in Sydney, Hong Kong, London, and New York. Trading currency is similar to trading stocks. When you trade currencies it means that you are exchanging one currency for another. In simple terms, a currency pair is an item that can be bought and sold. You will buy currency if you think it will rise in value and you will sell if you think the base currency will fall. In considering whether to buy or sell you need to think of the price that the broker or customer is willing to pay. This will determine how you move - not unlike stocks really! |