In 1971, when the âbuy and sellâ method shifted from fixed exchange rates to floating ones, at that time, an inter-bank market took place which in todayâs time we know as FOREX or FX or Foreign Exchange Market.
FOREX is nothing but a set of transactions or deal that involves exchange of specified currencies of any so-called nations at a decided rate as of any specified date or time. At the time of exchange, the rate of one currency to another currency is determined by the deliver and demand, to which, both the opposite parties agree.
Due to the expansion of international trade system and elimination of currency control in many nations the scope of dealings in the global FOREX market is constantly increasing. It is not only being limited to the scope of transactions but also the rates of the market development are also much remarkable. The average turnover of the global FOREX market is being estimated to .98 trillion, according to the Bank for International Settlements.
Both financial institutions and individual investors are being attracted by the FOREX market as it has increased numerous participants from all over the world. Due to the development of information technology, the market has seemed to be changed beyond appreciation. Thanks to the e-commerce systems, that has made so easily and publicly accessible that now only by just sitting at home we can deal or know about the FOREX details that too within a fraction of seconds.
Nowadays, major monopolist banks prefer electronic systems rather than two-sided deals. According to the studies shown, E-brokers have been estimated over 11% of the FOREX market turnover.
The FOREX market is a consign where one can apply oneâs personal financial, intellectual and psychic power not by attempting but by the strength of oneâs intelligence. The crucial part of the FOREX is the stability. Though it is strange to hear that there is always a sudden falls in a typical financial stock market but the FOREX market never falls i.e. if the dollar droop then the another currency gets stronger.
The FOREX market is a 24-hour market that does not rely on certain trade hours of foreign exchanges and it takes place among banks which are being located at the different corners of the world. If we have a detailed and dependable trade technology then it is good to make business out of it that is why the central banks buy pricey equipment and maintain several teams operating in different sectors of the FOREX market.
The features of the FOREX market which contributes to its growth are:
Liquidity â Higher the liquidity, the more powerful will be from the investor side as it gives them the choice to open or close a position of any size. Promptness and Availability-The FOREX market need not has to wait to give any certain respond to any given occasion due to its 24 hour work schedule and likelihood to trade round the clock. Value- Except for the natural bid market spread between the supply and demand price the FOREX market has usually incurred no service charge. Market trend-Each currency reveals its own typical temporary modifications which represents investments managers with the chances to manipulate in the FOREX market. Margin- Widespread credit leverages or margins in conjunction with highly variable currency quotations makes this market a highly gainful but also very chancy.