Forex is a global financial market, in which foreign currencies are traded.
Forex is defined as speculative trading with the help of commercial banks and brokerage companies. Earlier only commercial banks and large capital owners had an opportunity to make profit on Forex. In our days, any individual can start earning in the forex market, thanks to online trading and numerous brokers. The special virtue of Forex is that market participants are those who influence currency prices with the help of supply and demand.
It would be a serious mistake to call Forex a currency exchange, as it is an over-the-counter (OTC) market. It has no central marketplace where trading could be performed.
This is a distinct advantage, which enables traders to make deals all over the world.
Market participants use the forex market to exchange foreign currencies. There are traders who manage to earn good profits on currency exchange. They make money on a difference in exchange rates of currencies, performing speculative trading activity. That becomes possible thanks to frequent fluctuations in the currency exchange rates.
The origin of the forex market traces its history to the eighteenth centuries. It was established in Paris in 1867.
Every foreign currency could be freely converted into an amount of gold specified on a banknote. The exchange rate was almost fixed. The British pound served as a reserve currency during that time.
In 1944 the Bretton Woods system was developed. All foreign currencies were pegged to the US dollar, which in its turn was pegged to gold.
A new order resulted in a so-called floating exchange rate. Besides, that was the time when the International Monetary Fund was created in the US.
At the Jamaican Conference, which took place in Kingston in 1976, new principles of international trading in the currency market were officially established with the US dollar confirmed as the world’s major reserve currency. The forex market is the world’s largest and most volatile financial market.
Up-to-date technologies allow information to be instantly distributed across state borders, which makes it available in real time for market entities all over the world. The number of market participants totals hundreds of millions. All of them differ in size of trading capital and functions, which they cover.
Overall, the currency exchange market represents the process of interaction of traders, brokers, and banking institutions performed through the interbank system.
For this reason, banks are often called market makers.
To put it simply, the forex market is a system of interaction among regional currency markets using the latest communication technologies.
Forex market participants can be nominally divided into the following groups:
Fed — the US Federal Reserve System
ECB — the European Central Bank
BoE —the Bank of England, the world’s oldest banking system («Old Lady»)
BoJ — the Bank of Japan
BB — the German Bundesbank
BoF — the Bank of France
BoC — the Bank of Canada etc.
Commercial banks
Commercial banks usually act as market makers. Their quotes are used as a base for level pricing. Such banks actively cooperate with the market to respond to their clients’ requests and to meet their own interests.
Banks acting as market users, apply the market quotes. As a rule, their main activity is to respond to their clients’ requests.
There are several leading financial institutions, including Citigroup (US), HSBC (UK), Deutsche Bank (Germany), CSFB (Switzerland), Bank of Tokyo-Mitsubishi (Japan), Barclays Capital (UK), ABN Amro Bank (Netherlands), Bank of America (US), RBC Dominion Securities (Canada), Morgan Stanley (US).
Forex is defined as speculative trading with the help of commercial banks and brokerage companies. Earlier only commercial banks and large capital owners had an opportunity to make profit on Forex. In our days, any individual can start earning in the forex market, thanks to online trading and numerous brokers. The special virtue of Forex is that market participants are those who influence currency prices with the help of supply and demand.
It would be a serious mistake to call Forex a currency exchange, as it is an over-the-counter (OTC) market. It has no central marketplace where trading could be performed.
This is a distinct advantage, which enables traders to make deals all over the world.
Market participants use the forex market to exchange foreign currencies. There are traders who manage to earn good profits on currency exchange. They make money on a difference in exchange rates of currencies, performing speculative trading activity. That becomes possible thanks to frequent fluctuations in the currency exchange rates.
The origin of the forex market traces its history to the eighteenth centuries. It was established in Paris in 1867.
Every foreign currency could be freely converted into an amount of gold specified on a banknote. The exchange rate was almost fixed. The British pound served as a reserve currency during that time.
In 1944 the Bretton Woods system was developed. All foreign currencies were pegged to the US dollar, which in its turn was pegged to gold.
A new order resulted in a so-called floating exchange rate. Besides, that was the time when the International Monetary Fund was created in the US.
At the Jamaican Conference, which took place in Kingston in 1976, new principles of international trading in the currency market were officially established with the US dollar confirmed as the world’s major reserve currency. The forex market is the world’s largest and most volatile financial market.
Up-to-date technologies allow information to be instantly distributed across state borders, which makes it available in real time for market entities all over the world. The number of market participants totals hundreds of millions. All of them differ in size of trading capital and functions, which they cover.
Overall, the currency exchange market represents the process of interaction of traders, brokers, and banking institutions performed through the interbank system.
For this reason, banks are often called market makers.
To put it simply, the forex market is a system of interaction among regional currency markets using the latest communication technologies.
Forex market participants can be nominally divided into the following groups:
Fed — the US Federal Reserve System
ECB — the European Central Bank
BoE —the Bank of England, the world’s oldest banking system («Old Lady»)
BoJ — the Bank of Japan
BB — the German Bundesbank
BoF — the Bank of France
BoC — the Bank of Canada etc.
Commercial banks
Commercial banks usually act as market makers. Their quotes are used as a base for level pricing. Such banks actively cooperate with the market to respond to their clients’ requests and to meet their own interests.
Banks acting as market users, apply the market quotes. As a rule, their main activity is to respond to their clients’ requests.
There are several leading financial institutions, including Citigroup (US), HSBC (UK), Deutsche Bank (Germany), CSFB (Switzerland), Bank of Tokyo-Mitsubishi (Japan), Barclays Capital (UK), ABN Amro Bank (Netherlands), Bank of America (US), RBC Dominion Securities (Canada), Morgan Stanley (US).
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