Foreign Exchange Market

The Forex Market is the largest traded market it the world

The Foreign Exchange Market, also called the "Forex," "FX," 4x," and "currency market" is a market where one currency is exchanged for another currency. You may see during traveling that there is always a booth in the airport where money can be exchanged. While this is a very inefficient means of exchanging or trading currency, today there are brokerage firms that hold accounts where speculators or traders can trade one currency for another.

The FX market is the largest traded market in the world. The average daily traded volume in the global forex is currently exceeding US$ 3.2 trillion. The currency trading market is unique in several ways

The daily trading volume is the largest in the world
Making the market extremely liquid
Traded 24 Hours per day
Globally Traded around the world
Which results in interesting market movements
Most brokers guarantee stop losses
Most brokers offer very low margin requirements
Very high leverage is offered compared to any other market

In this very large forex market there are various levels of access to forex rates, or currency prices. At the top level sits the inter-bank market. The inter-bank is made up of the the largest investment banking firms in the world.

The top 5 inter-bank currency traders are:

Deutsche Bank 21.7%
UBS AG 15.8%
Barclays 9.1%
Citi 7.9%
Royal Bank of Scotland 7.3%

Spreads, or the difference between the bid and the ask price, are very small if anything at all between the inter-banks. As you fall down the levels of access and outside of the inter-bank system the spread values widen. Spreads can be as low as 0 - 2 pips per transaction (if you do not know what a pips is do not worry, we will get to that in a moment). The reason why pip spreads at this level are still very small is due to the trading volume that occurs at this level. Since there is a very large trading volume that takes place this guarantees that a large number of transactions will take place. As you get down to the lower levels of access on the banking system the spreads start to increase

Where is the Foreign Currency Market Traded?

There is no specific building or place where the FX is traded. The forex is traded on the electronic inter-bank banking network through a number of interconnected marketplaces. There are a number of different forex rates or prices and depending on what bank or market maker is trading is what determines the current rate. One would start to assume that if there are a lot of connected market makers that price could get out of hand, and sometimes in the forex it does, however in all actuality rates are often very close to one another. Typically currency rates are priced at the London price.

London is the currency trading capital of the world, it has the most power, dominance, and the largest moves tend to occur during the London session. The next most influential global trading center is New York, followed by the Asian Market (Tokyo, Hong Kong, & Singapore), and then the Australian / New Zealand session. Currency trading follows the sun as one market closes another market is opening and more currency starts to flow.

Make Money Online

Most people of the world do not know that they can make money online and work from home trading and investing in the forex market. As a foreign exchange trader a person can make his own hours due to the fact that the forex is traded 24 hours per day. Students who study abroad or attend college can also make addition income while learning additional skills for life. Now days people can start with as little as $250 (although I recommend starting with at least $5000). All you need to get starting with forex investment is some money and forex training.