History forex

The purpose of this e-book is to introduce the forex market to you. As with many markets, there are many derivatives of the central market such as futures, options and forwards. For the purpose of this book we will only be discussing the main market sometimes referred to as the Spot or Cash market.

The word FOREX is derived from Foreign Exchange and is the largest financial market in the world. Unlike many markets, the FX market is open 24 hours per day and has an estimated $1.5 Trillion in turnover every day. This tremendous turnover is more than the combination of all the worlds' stock markets on any given day. This tends to lead to a very liquid market and thus a desirable market to trade.

Unlike many other securities (any financial instrument that can be traded) the FOREX  FX market does not have a fixed exchange. It is primarily traded through banks, brokers, dealers, financial institutions and private individuals. FOREX Trades are executed through phone and increasingly through the Internet. It is only in the last few years that the smaller investor has been able to gain access to this market. Previously, the large amounts of deposits required precluded the smaller investors FOREX . With the advent of the Internet and growing competition it is now easily in the reach of most investors.

You will often hear the term INTERBANK discussed in FX terminology FOREX. This originally, as the name implies, was simply banks and large institutions exchanging information about the current rate at which their clients or themselves were prepared to buy or sell a currency. FOREX  INTER meaning between and Bank meaning deposit taking institutions normally made up of banks, large financial institutions, brokers or even the government FOREX.

The FOREX  market has progressed to such a degree that the term interbank FOREX  now FOREX   means anybody who is prepared to FOREX buy or sell a currency. It could be two individuals or your local travel agent offering to exchange Euros for US Dollars. You will, however, find that most of the brokers and banks use centralized feeds to insure reliability of quote. The FOREX  quotes for Bid (buy) and Offer (sell) will all be from reliable sources FOREX . These quotes are normally made up of the top 300 or so large institutions. This insures that if they place an order on your behalf that the institutions they have placed the order with is capable of fulfilling the order.

Now FOREX  although we have spoken about orders being fulfilled, it is estimated that anywhere from 70%-90% of the FX market is speculative. In other words, the person or institution that bought or sold the currency has no intention of actually taking delivery of the currency. Instead, they were solely speculating on the movement of that particular currency FOREX.

Source: Bank For International Settlements HYPERLINK http://www.forx-new-forx.blogspot.com/ :

http://www.forx-new-forx.blogspot.com/ . Extract From The Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity.

Currency        1989       1992       1995        1998       2001

US Dollar       90           82.0        83.3         87.3        90.4

Euro                                                                            37.6

Japanese Yen  27           23.4       24.1          20.2       22.7

Pound Sterling 15           13.6       9.4            11.0       13.2

Swiss Franc     10           8.4         7.3            7.1         6.1

As you can see from the above table over 90% of all currencies are traded against the US Dollar. The four next most traded currencies are the Euro (EUR), Japanese Yen (JPY), Pound Sterling (GBP) and Swiss Franc(CHF).FOREX  As currencies are traded in pairs and exchanged one for the other when traded, the rate at which they are exchanged is called the exchange rate. These four currencies traded against the US Dollar make up the majority of the market and are called major currencies or the majors FOREX .

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