About Forex
Forex (Foreign exchange market) is the international financial market for free trade of national currencies. It has been operating since seventies of the XX century - from the moment when biggest countries decided to switch from fixed exchange rates to floating rates.
Daily volume of Forex trading exceeds 4 trillion US dollars, and this number is still growing.
Main currency of Forex operations is the United States dollar (USD).
Market participants:
- Central banks;
- Commercial banks;
- Investing banks;
- Brokers and dealers;
- Pension funds;
- Insurance companies;
- International corporations;
- Individuals.
Unlike stock exchanges, Forex market doesn't have any fixed working hours - it operates 24 hours per day, 5 days per week, since buying/selling operations are performed by banks allover the world at any time of day and night (some banks even work on Saturdays and Sundays). As any other exchange, Forex market is driven by supply and demand for a particular tool. For instance, there are buyers and sellers for "Euro vs US dollar".
Exchange rates at Forex are changing constantly, and fluctuations may happen many times per second - this market is very liquid.
Exchange rates are influenced by:
- Economical factors (economical indicators of countries at the moment, politics of Central banks, changing interest rates, behaviour of importers and exporters, etc);
- Political factors (speeches of political leaders, president elections, etc);
- Market participants' mood and feelings, their expectations, rumours, etc;
- Force-major events (terroristic acts, accidents, catastrophes, etc).
Nevertheless, Forex market is much more stable than stock exchanges - it is not subject to huge surges, even if one currency is declining, another one is improving.
One of big advantages of the market is its' close relation with latest information technologies. Clients from different parts of the planet may connect to Internet and start trading. Even big banks tend to use electronic trading - it's the most common way of trading now. At this moment, Forex is at the rapid developing phase, and it's expected to grow more and more in the future.
Some of the advantages of Forex market over stock markets and/or other equities include:
- Traders can make profits both on declining and developing economies;
- Traders can make very short-term orders - with some other markets there are certain regulations;
- Thanks to retail centers like "Forex4you", it's much easier to join Forex market - virtually no minimum capital, quick registration, etc;
- Market is not regulated;
- There are no broker commissions or they are very low;
- Much higher leverages are provided;
- Market works non-stop 24 hours.
