Monday, July 20, 2009


Foreign exchange market (Redirected from Forex)Jump to: navigation, search This article needs additional citations for verification.Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (July 2008)Foreign exchangeExchange ratesCurrency bandExchange rateExchange rate regimeFixed exchange rateFloating exchange rateLinked exchange rateMarketsForeign exchange marketFutures exchangeRetail forexProductsCurrencyCurrency futureNon-deliverable forwardForex swapCurrency swapForeign exchange optionSee alsoBureau de changeThe foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another.
It is the largest and most liquid financial market in the world, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. The average daily trade in the global forex and related markets is continously growing and was last reported to be over US$ 4 trillion in April 2007 by the Bank for International Settlement.

* 1 Market size and liquidity
* 2 Market participants o 2.1 Banks o 2.2 Commercial companies o 2.3 Central banks o 2.4 Hedge funds o 2.5 Investment management firms o 2.6 Retail forex brokers o 2.7 Other
* 3 Trading characteristics
* 4 Factors affecting currency trading o 4.1 Economic factors o 4.2 Political conditions o 4.3 Market psychology
* 5 Algorithmic trading in forex
* 6 Financial instruments o 6.1 Spot o 6.2 Forward o 6.3 Future o 6.4 Swap o 6.5 Option o 6.6 Exchange Traded Fund
* 7 Speculation
* 8 References
* 9 See also
* 10 External links[edit] Market size and liquidityThe foreign exchange market is unique because of
* its trading volumes,
* the extreme liquidity of the market,
* the large number of, and variety of, traders in the market,
* its geographical dispersion,
* its long trading hours: 24 hours a day except on weekends (from 3pm EST on Sunday until 4pm EST Friday),
* the variety of factors that affect exchange rates.
* the low margins of profit compared with other markets of fixed income (but profits can be high due to very large trading volumes)
* the use of leverageMain foreign exchange market turnover, 1988 - 2007, measured in billions of USD.Main foreign exchange market turnover, 1988 - 2007, measured in billions of USD.As such, it has been referred to as the market closest to the ideal perfect competition, notwithstanding market manipulation by central banks.
According to the BIS,

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