FOREX MARKET

Forex is an economic term, short for the foreign exchange market, the largest world market by today. This market is the most liquid and unpredictable of all, not only because of its geographical spread and the variety of persons and organizations working here, but also because of a huge amount of factors affecting it. One also has to remember that Forex market is not a stock exchange. It does not have any trade institutions or areas.

The foreign exchange market, now known by the name of Forex, started its functioning in 1971, in response to forming dependencies in national currency rates. On March, 1973, the fixed rates system was replaced by more flexible system of floating rates. Because of this, the importers and exporters (with the financial institutions concerning them) had to take their places on the newly established market. The role of central banks much increased: they now had the possibility to affect currency rates, thus influencing the common economy of the state.

Forex market is based on the system of various institutions, which are various central banks, investment banks, banks of commerce, private dealer and broker networks, transnational corporations, pension funds, insurance companies etc. Like every international market, Forex always corrects itself, modifying rates the most liquid currencies the way they correspond the current balance of demand and supply.

The most popular possibility of getting an income by trading on Forex market is really called a marginal trade based on speculation on the fluctuations of liquid currency rates. This kind of activity becomes available for a private person in collaboration with a bank of commerce, a broker or a dealing center providing such services. There are many books and articles on Forex market, as well as the trade on it.