Foreign Exchange (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. The International currency market FOREX is the youngest currency market developed from all segments of the financial markets. The major principle of work in the currency market consists in an exchange of one currency for another with the purpose of receiving profit on a difference of rates. Exchange rates vary under the influence of a supply and demand on the currency of a stable country. A supply and demand, in turn, depend on macroeconomic news, political and other world events.

Transactions in FOREX market are carried out by a principle of margin trade which allows a trader to conclude transactions for amounts considerably greater than his starting capital. Credit transactions, with a leverage provides the basis on which the trader opens the trading account. The appeal of investment in this market is also connected with the speed of the fulfillment of the transaction. The market works round the clock; transactions are made on the Internet, through a secured access, or by a telephone system.

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