The Huge Arena Of Forex And Stock Market

By: Stephen Campbell

One of the busiest markets nowadays is the stock market for the reason that most economic transactions are done here-- big money flows in and out of the stock markets. In this arena, you are able to get oriented with many subjects like the penny stocks, the forex market, stock quotes-- among others. But in this article, we discuss primarily on forex market basics.

The foreign exchange or forex market is relatively young having begun in the early 1970s after the United States of America dropped the gold standard and national currencies began to fluctuate in a wider scope. For about 30 years prior to that, most nations had an agreement to keep their currency values stable in connection to the U.S. dollar, making a forex market unnecessary. With that no longer the case, banks quickly figured that fact that a profit could be generated in "buying" currency when it was devalued and "selling" it after it strengthened, just like any other commodity.

At present the for-ex market handles about $1.9 trillion in transactions each day, and it runs 24 hours a day, five days a week. (With countries around the world involved, it is always daytime somewhere.) The most traded currencies are the U.S. Dollar, the Euro, Japanese Yen, British Pound, Swiss Franc and Australian Dollar. Some currencies are also getting popularity like the Chinese Yuan and Singaporean Dollar.

The foreign exchange market is overwhelmingly dominated by international banks, government banks, investment banks, corporations, and hedge funds. As a matter of fact, individual traders cover for only about 2 percent of the for-ex market. Nevertheless, many individuals do try their hand at it, with varying degrees of success.

In the foreign exchange business, transactions are always handled in pairs: You purchase one currency and sell another one. The idea is to make a trade when you believe the currency you are buying is going to go up in value against to the one you are selling-- the bottom line is to make profit out of it.

The for-ex market is wide and daunting and mostly inhabited by huge organizations. But it can be a business hub for individuals who have studied the finer points and who want to take a risk on something potential source of profit. And since the whole world is making use money, the trading of that money is always going to be a major business in the financial world.

Foreign Exchange
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