FOREX – briefly explained

FOREX (FOReign EXchange market) is an international foreign exchange market, where money is sold and bought freely. In its present condition FOREX was launched in the 1970s, when free exchange rates were introduced, and only the participants of the market determine the price of one currency against the other proceeding from supply and demand.

As far as the freedom from any external control and free competition are concerned, FOREX is a perfect market. It is also the biggest liquid financial market. According to various assessments, money masses in the market constitute from 1 to 1.5 trillion US dollars a day. (It is impossible to determine an absolutely exact number because trading is not centralized on an exchange.) Transactions are conducted all over the world via telecommunications 24 hours a day from 00:00 GMT on Monday to 10:00 pm GMT on Friday. Practically in every time zone (that is, in Frankfurt-on-Main, London, New York, Tokyo, Hong Kong, etc.) there are dealers who will quote currencies. Better Leverage Trading in the spot currency markets provides advantages over trading futures contracts. One of the main advantages for traders trading spot currencies is the margin rate or leverage that clients are given. In spot currency trading, customers receive one low margin rate for trades done 24 hours a day. In futures trading, the client has one margin rate for “day” trades and one margin rate for “overnight” positions. This can become a hassle for traders and decreases the overall tradability of the futures markets. Margin rates in spot currency trading vary from around 1 to 5 percent depending on the size of transactions a particular trader initiates. Spot currency trading gives the customer one rate all the time, no hassles and no margin calls. One rate so that the trader can manage their own risk efficiently and simply. 24 Hour Access to the World Select the forex market, select the time, and start trading.

The massive liquidity of forex, combined with a true 24-hour forex market that’s traded 5.5 days a week, offers you exceptional independence and forex currency trading when you want to, not when the market wants you to. The forex market literally follows the sun around the world, moving from major banking and financial centers of the United States to Australia and New Zealand to the Far East, to Europe and finally back to the United States. During each trading day, overall foreign currency trading volume is determined by what markets are open and the times each of these markets overlap one another. With each passing second, minute and hour, forex currency trading volume remains high, but peaks highest when the British, European and U.S. markets are open at the same time – from 1 p.m. GMT to 4 p.m. GMT. The volume of the Pacific Rim markets, such as Japan and Hong Kong, subsides compared to the crest of the U.S. market, but still offer the forex trader the ability to analyze the highly traded Pacific Rim currencies.