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The Ways Of Foreign Exchange Market

By Kyle Cox

Currencies are traded in the foreign exchange market. Banks, financial institutions, governments, speculators, currency traders and money managers are involved in the buying and selling of currencies. It was only in the 1970s that foreign exchange emerged as a distinct global economic activity. Its volume of transaction every day has risen to more than US$4 trillion. More than 60 percent of the Forex trading is in the nature of speculation. The remaining is what is actually transacted for goods and services that include both real assets as well as financial assets. Investment without making the requisite assessment and analysis, or when the risk factor is not considered for investment even at the risk of losing the sum invested, is called speculative investment. Forex market has been experiencing rapid increase in its daily transaction.

There are two types of foreign exchange rates. They are the spot exchange rate and the forward exchange rate. The spot exchange rate is the current exchange rate at which two currencies are transacted between each other. The forward exchange rate is the rate that is quoted and traded today, but whose delivery and payment are made at a specific future date. Since 1940s, the Western countries had fixed their currencies to the dollar and the exchange rates were expressed in terms of dollar. But this was changed to the floating exchange rate in 1971 where the market demand and supply of the currency determined its rate.

Currencies are bought in the forex market by the investors expecting that their rate will rise in the future when they could sell them to make a profit. The factors that influence the changes in the rate of currency are quite complex. The investor should have a good understanding of not only the basics of currency trading, the way the foreign exchange market behaves and the factors that influence the behavior. There are a variety of learning tools for Forex education that one can buy to get an insight into the Forex market. Some of them are Instant Forex Profit, The Forex Video Course, Professional Forex Training, The Magical Forex Trading, The Forex Strategy Workbook, The Forex Assassin and Auto Cash System.

Experts in Forex market have successfully played the market to their advantage and raked in huge profits but their number is small. An inexperienced retail trader or speculator is disadvantaged will have less information as compared to the experienced ones. So it is not true that the same returns can be expected with the same set of tools, data sources and techniques. There is much more to it that what one may see in the first instance.

The Forex market business is not like any other business wherein a lot of people succeed in no time. However, you can experience success with the help of the various Forex Training tools like videos, workbooks and others.

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Article Citation
MLA Style Citation:
Cox, Kyle "The Ways Of Foreign Exchange Market." The Ways Of Foreign Exchange Market. 2 Jul. 2010. uberarticles.com. 26 Jul 2014 <http://uberarticles.com/finance/currency-trading/the-ways-of-foreign-exchange-market/>.

APA Style Citation:
Cox, K (2010, July 2). The Ways Of Foreign Exchange Market. Retrieved July 26, 2014, from http://uberarticles.com/finance/currency-trading/the-ways-of-foreign-exchange-market/

Chicago Style Citation:
Cox, Kyle "The Ways Of Foreign Exchange Market" uberarticles.com. http://uberarticles.com/finance/currency-trading/the-ways-of-foreign-exchange-market/


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