By Cedric Welsch – The securities market offers a lot of opportunity for individuals to build long term wealth or make some quick cash buying and selling stocks. It is common knowledge that public companies offer shares of stock for sale on centralized exchanges such as the New York Stock Exchange. Not many people know however about the numerous other securities that are traded every day in markets around the world. One of the most interesting markets that aren’t well known still by many is the foreign currency exchange market also known as FOREX, FX or simply the currency exchange.
What is the FOREX market?
This exchange is different than other securities exchanges around the world. It is known as an over the counter market in which there is no centralized trading authority that handles transactions such as the NASDAQ or NYSE entities. So if you go to your broker and say you want to exchange your 500 dollars in American currency for the equivalent in Japanese Yen, he won’t be of much help. One of the main reasons that the FOREX market exists is to facilitate investment and international trade. Businesses and investors around the world can change one form of money to another in order to do business or to participate in investment activities with money. For example, some investors will borrow less valuable monies and lend or invest in higher value monies in order to turn a profit. The FX market is one of the most liquid financial markets in the world because all that is being traded is money.
Who invests in the FX market?
The currency market is a bit different than other securities markets and as such the participants are also very different. Instead of individual investors, there are huge centralized banks, corporations, currency speculators, governments, large banks and other financial institutions. Small investors would have trouble realizing any profits or other gains by participating in this market. Central banks makeup the bulk of trading volume followed by smaller banks and then by large international corporations that have needs like paying people that work in different countries or the importation of goods that requires a different currency for payment. Trading occurs in these levels and the top tier levels of trading have information that is not known to the lower tiers.
The FOREX market does trillions of dollars in volume every day and helps foster international trade. Without this decentralized market, it would be very difficult for international business to thrive. Major participants such as central banks, commercial companies, speculators and corporations use the market to their advantage for investment purposes. However the average Joe off of the street will have a hard time making any money on this type of market unlike other securities exchanges such as the New York and NASDAQ exchanges.
About the Author
Do you want to really make profits with forex? Make sure you get fresh updates ahead of everybody else here: Forex News
Also, you need to know how to read and analyze the trading market well. Learn Currency Trading News
