The word Forex or FX describes the trading in the Foreign Exchange market (or currency market).
The Forex Market is the largest financial market in the world and turns over up to $ 5 trillion per day!
The main participants in the Forex market are larger international banks (central banks and federal governments), followed by insurance companies, hedge funds, other financial firms and last but not least the speculative retail traders all over the world.
Trading currencies was not always available for retail traders:
- Since 1971, after the Bretton Woods system broke down, the trading with Forex was restricted only to the large companies as banks or large financial institutions.
- The world finally accepted the use of floating foreign exchange rates during the Jamaica agreement in 1976.
Since 1996 the speculative retail traders have been able to trade Forex. It was the first generation of forex online trading platform based on the internet.
The forex market is the most liquid financial market in the world and the average daily turnover is continuously growing.
The foreign exchange market is unique because of:
- its continuous operation – 24 hours a day (except weekends)
- trading costs are less
- no market manipulation due to high liquidity
- the use of leverage to enhance profit and loss margins
- its geographical dispersion