Forex home  Forex For The Future  Forex Day Trading  Learn Forex Trading   Forex Market 

Trading Strategies  Forex Trading

 

Forex For The Future



A non-geographical, existential market, the foreign exchange market exists wherever one currency is traded for another. Far and above the largest market in the world, the $2 billion traded every day includes trading between large banks, individual investors, corporations, governments and various other institutions.
Established in 1971, Forex trading has only recently become an individually traded market. Until the present time, only major institutions could trade on this market. Retail traders are currently a small, but constantly growing, part of the Forex.


Ten years ago, the Wall Street Journal estimated the daily trading volume in the forex market to be in excess of $1 trillion. Today that figure has grown to exceed $1.8 trillion a day. Based on the Bretton Woods Agreement of 1945 aimed to stabilize international currencies and prevent money fleeing across nations, the U.S. dollar became fixed at a rate of $35 per ounce of gold.
Thus, the gold standard was formed and Forex trading became a possibility. But only in 1971, when the Bretton Woods Agreement was abandoned, was the Forex market established. By 1973, major currencies became free to the push of supply and demand. The power of speculators came to be.
With the advent of technological innovations like computers in the 1980's, money was soon able to be traded across time zones. Within minutes, like never before, massive amounts of currency could be exchanged. Today, London holds the world's largest international financial center and the major site for Forex trading.
The interbank market is beneficial for both the major commercial turnovers and large amounts of purely speculative trading that takes place on an everyday basis. Some large banks trade billions of dollars daily. While some of that trading is on behalf of the bank's customers, much is for the bank's own account. Until recently, brokers on the market did most of the business of trading for a small fee, but now individual investor's can jump in on their own.
The benefits of individual investors gaining hands-on access to Forex trading really came to be when the large inter-bank units began to offer small traders the opportunity to buy or sell smaller units (or lots) on their own.
At present, the Forex market is appealing because of its massive trading volume, extreme liquidity, the number and variety of traders in the market, long trading hours, factors that affect the currency exchange rates and the geographical dispersion of the market.
Between April 2005 and April 2006, Forex trading increase by 38 percent and has more than doubled since 2001. This can be attributed to the increasing importance of foreign currency exchange as an asset and an increase in fund management assets. Also, the vast array of execution venues, like Internet trading platforms, has also made it easier for retail traders to trade.
In May 2006, a European exchange survey company found the top 10 investors in the Forex market were mostly American banks such as Bank of American and JP Morgan Chase, as well as international investors like Deutsch Bank and Barclays Capital.
Trading on the foreign exchange market is up and coming
 

Forex secrets

Not long after I first became involved in Forex trading I began to have a series of insights. I noticed that other people did not appear to be aware of some of the things that somehow seemed obvious to me. The funny thing about Forex Secrets is that once you see them, you will wonder why they are not obvious to everyone. In the Forex Trading world people are attracted to this business primarily through the marketing efforts of the Forex brokers. And most of the training available is either directly or indirectly connected to the Forex broker industry. To put it more clearly, if the training is not directly through a broker it is likely that the training program is connected with an introducing broker. An introducing broker is a person or company that refers customers to a broker and receives compensation in the form of a percentage of the PIP spread that the broker collects on all the trader’s trades.

Now, when I first learned about Forex brokers I assumed that it would make business sense for the broker to be very concerned about the trader’s long term success since they seem to make their money from the PIP spread that is charged on each of the customers’ trades. Apparently, that was a naive assumption on my part. It didn’t take long to start hearing about how most of the retail Forex brokers in the U.S. actually keep the trades “in house” meaning that they do not really exist on the interbank market. Because it is a known principle that 90-95% of Forex traders fail and lose their accounts usually within 3 – 6 months, it makes business sense for brokers to just keep their accounts instead of being content with the PIP spread on the trades. If this is shocking or does not make sense just do some research on the subject and you will surely find plenty of information to further enlighten you.

So there are two things to consider here. One is that many Forex brokers may have a vested interest in the certain loss of the majority of traders. And the second is that Forex brokers have a vested interest in traders placing many trades on the short term time frames. Is it any wonder that almost all Forex trading training courses teach only how to trade on the extreme short term time frame?

So the first thing that should be obvious about Forex trading but still remains a “secret” is that in order to succeed you will want to do what the rest of the world is not doing.

privacy policy