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The Foreign exchange market (FOREX) is the biggest market in the world. Daily turnover exceeds 2.7 Trillion USD, that makes it three times larger than the stocks and bonds markets put together. Forex is an Over The Counter (OTC) market which does not have a specified place of residence - i.e. "Floor" of any stock exchange. The market consists of banks, brokerage houses and other enterprises systems interconnected by computer and communication networks, including the Internet. The lack of a specified physical location for the FOREX market allows it to work 24 hours a day, 5 days a week. All the developed countries in the world contribute to it's existence. The main centers of FOREX transactions are London, New York and Tokyo. Major market participants groups are: - hedgers – typically medium and large export and/or import companies or dealing other ways with foreign currencies, seeking to limit thier currency risks. Due to an increase in private individual debt, individual investors can also be included in this group.
speculators – these are companies and individual investors that seek to gain profits from changes in the price of derivatives over time. arbitragers – investors with significant assets that make transactions on a minimum of two markets simultaneously, using exchange rates differentials to make profits. market makers – financial institutions that act as intermediatries in transactions between speculators and hedgers. They include banks and brokers.
The great number of participants makes FOREX the most liquid financial market in the world and practically impossible to manipulate even for central banks of the most developed countries. For this reason, traders who are able to properly predict future price movements can achieve significant profits on the market.
To date this currency market was accessible only to major players like banks, investment funds, large companies or wealthy private investors. Nowadays, thanks to licensed electronic trading brokers like X-Trade, even individual investors can take a part in trading FOREX worldwide. |
