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History of The Forex Market.
The Foreign Exchange market, also referred to as the "Forex" or "FX" market is the largest financial market in the
world, with a daily average turnover of US$1.9 trillion -- 30 times larger than the combined volume of all U.S. equity
markets.
"Foreign Exchange" is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs,
for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).
There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that
buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their
domestic currency. The other 95% is trading for profit, or speculation.
For speculators, the best trading opportunities are with the most commonly traded (and therefore most liquid)
currencies, called "the Majors." Today, more than 85% of all daily transactions involve trading of the Majors,
which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.
A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day
begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors
can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or
night.
The FX market is considered an Over The Counter (OTC) or 'interbank' market, due to the fact that transactions are
conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an
exchange, as with the stock and futures markets.
Article Source:
Forex.com
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