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Forex/FX is the name given to foreign currency. Forex is trade on the foreign exchange market for currencies; the market operates on the simply economic laws of demand and supply where one party buys a certain amount of one currency in exchange for a quantity of another currency. The foreign exchange market is the most liquid financial market in the world, liquidity being the rate at which money can be change to other assets. The forex market involves trade between large banks, currency speculators, governments, central banks and other financial institutions.

The amount of money that is being traded on the foreign exchange market is quite big an the most recent estimated figures published by the Bank for International Settlement show that over US $4 trillion is being traded on the foreign currency market.

The foreign exchange market is very dynamic and operates differently from other markets because the foreign exchange market trades in volumes, it is the most liquid market, trade can occur between geographically dispersed people, the foreign exchange market has a large number of different traders, the forex market is not affected by time as it normally operates 24/7 around the clock, the forex market is affected by a variety of factors which make it a very unstable and risky market. The forex market also has lower margins of profit as compared to other markets of fixed income and the forex market makes use of leverage.

The forex market is an over the counter market (OTC) in which dealers/brokers negotiate and agree with one another, because there is no central clearing or exchange house. The exchange market has grown tremendously over the years, and this growth in the forex trading market is largely attributable to the increase in fund management assets such as pension funds, and hedge funds, however the major reason for the increase in the forex trading market is the growth of internet trading which has made it easier, faster and cheaper to trade in the forex market despite geographical differences, with the biggest geographic trading center being in London.UK.

The forex market is different from the stock market, in that in the stock market participants have access to all the same information on prices, whereas the forex market is divided into different levels of access. The inter-bank is at the top of the market which consists of investment banking firms which are in the inter-bank. The forex market also consists of financial companies that normal trade in small amounts compared to those of banks; most companies that deal on the forex market are multinational companies. Central banks of nations also make up a huge part of the foreign exchange market, they play a very important part in the market as they have official target rates for their currencies and they can make use of their vast foreign currency reserves to bring stability to the market.

The major currencies traded on the international forex market are the US dollar, Japanese Yen, British Pound, the EURO, the Australian Dollar, New Zealand Dollar, and Canadian Dollar. The foreign currency exchange rate is affected by many factors that determine the currency prices, the prices of the goods are determined by the forces of demand and supply and demand, which means that the prices are constantly changing and are never stable.

Recently there has been an increase in electronic trading in the foreign exchange market, with algorithmic trading becoming more common. Financial transactions on the foreign currency market today are now being done over the internet via forex systems that are available on the internet. the biggest advantage of forex systems is that you don’t have to be a central bank, a financial institution, or a big company in order to trade in the global foreign currency market all you need to do is have a forex trading system software on your computer and you can trade on the forex market and earn some money. FXCM is a holdings company that can give you the opportunity to do this, the company is one of the largest companies in the world that supplies online trading services for people, retailers, institutions and anyone else interested in joining the forex market. FXCM has over a 100.000 live accounts trading on the internet via its trading station software. The company offers its clients 24/7 dealings, multi-lingual sales, and technical support, the company has many subsidiaries such as Forex Capital Markets LLC, FXCM Asia LTD, Forex Trading LLC, and Forex Capital Markets LTD, the company branches in many of the major cities in the world such as San Francisco, Dallas, London, Tokyo, New York City, and Hong Kong. You can start trading on the internet with FXCM through its two primary websites Daily FX, and FXCM were you can open up a forex trading account and using the money in your forex trading account you can then start buying and selling forex on the foreign currency market. FXCM will constantly keep you informed of changes on the foreign currency market, plus they will give you advice from their team of industry professionals.

The forex market is affected by economic policies, implemented by governments and central banks in various countries that trade on the foreign exchange market, economic conditions prevailing in the economy for example inflation, the economic conditions can be determined from the economic reports, government deficit or surplus, economic growth, and the balance of trade. Another factor that influences forex exchange rates are political conditions for example if there is war in a country no one would want to trade with that country because their currency will not be stable and is likely to fall at any time. another factor that influences foreign currency exchange rates is the market psychology or the trader perception, terms such as “buy the rumor , sell the fact” are normally used in the foreign currency market. Speculation is rampant in the forex market and people can change the prices at which forex is trading through speculation with out there being any significant change in the market.