What Is Forex?
Today the currency exchange market (Forex) leaves all other world markets far behind in terms of trading volumes. For example, the daily turnover for securities is estimated at 300 billion US dollars, while Forex operates with turnovers of several trillions US dollars every day. But huge turnovers are not the only thing that makes Forex a very attractive market for investors.
There are many other benefits:
- it is a global market;
- it has a very high liquidity: currencies are bought and sold within few seconds;
- currencies change all the time, giving a real possibility to close a proper trading deal;
- you can make trading contracts 24 hours a day;
- all transactions are done very quickly;
- no commissions are taken when you make a contract (there are no exchange fees on Forex, because brokerage companies get revenue from spread on buy and sell rates);
Forex market was created in 1971-1976 as an interbank “tool” used for operating huge monetary assets between the countries. At that time the rate of one currency to another was defined by mutually agreed exchange rate.
Many years have passed and today Forex turned into one of the major income sources for the banks. Such renowned banking institutions as Citibank, Chase Manhattan Bank, Barclays Bank, Sosiete Generale Bank & Trust, ABN-AMRO Bank report to get their biggest revenue from currency operations.
Modern technologies made Forex accessible to all investors. Acceleration in transfer of monetary assets and supersonic informational exchange combined with latest technological inventions made it possible to trade on Forex even with small capitals (starting from $100). That is why Forex attracted a new wave of small investors and this surely increased the liquidity of this market.