How Long Has Forex Trading Been Around

1.1 Definition of Forex

What is Forex Trading?

Forex trading or the trade of Foreign Substitution (Forex) has but been commonly available to the retail traders in the last 3-5 years. For the common human being, to have access to a forex brokerage house which can procedure your orders, at his/her convenience was literally impossible 10 years ago.
Today, thank you to the advent of the internet and internet based retail Forex brokerages. Information technology is considering of them retail Forex traders are able to take advantage of this exciting and lucrative business.
Forex trading is basically trading of currencies (strange commutation). The objective of this trading is to buy and sell currencies in expectation of the currency to rising or fall in value against one another.

The Foreign Exchange Market

The foreign substitution market is the largest and the most liquid of all financial markets. Due to the diversity of the various players in the market and the underlying nature of currencies to be involved in other assets, currency trading is undoubtedly the almost liquid exchange.
With key banks, large banks, currency speculators, corporations, hedge funds, governments and other financial institutions being active players in the market, it is like shooting fish in a barrel to understand why.
In fact, the overall daily exchange volume of the FX market place is expected to be in the range of 6 Trillion USD to 8 Trillion USD. Over the concluding few years, Foreign exchange book has grown steadily.

What is Forex Trading?

The graph to a higher place illustrates how foreign commutation volume has increased tremendously from the year 2000 to the year 2015. In the year 2000, the volume was effectually 2 trillion USD per solar day and presently the daily commutation volume is around viii trillion USD per twenty-four hour period.
This is mainly due to the growing importance of foreign exchange as an asset class and every bit a risk mitigation factor in fund management, assets direction, hedge funds and specially with offshore funds and of alimony funds.

The Retail Strange Commutation Market

With the growing volume of retail Foreign Exchange, there has been a abiding influx of diverse brokers and dealers to facilitate these transactions. As foreign exchange is an OTC (over the counter) marketplace, the brokers and dealers make deals straight with each other. This therefore allows a true global "market place" which can let trading every bit long every bit the brokers/dealers are willing to trade.
This has likewise given nascency to the possibility of having a true 24 hours surround, which extends over 5 and ½ days.

What is Forex Trading?

Of these diverse commutation hours, the largest volume is adamant to be during London trading hours, accounting to well-nigh 37% of overall book in 2014.
It is therefore of little surprise that the EUR/USD currency pair accounts for nigh 39% of all transactions in the substitution market. Therefore, if there is a primal news shift or market focus on any event, EUR/USD will exist quite substantially affected as it accounts for more 1 transaction out of every four transactions made.

What is Forex Trading?

Trading in the retail Forex Market has been made extremely attainable and affordable with the competitive environs that retail brokerage houses take built over the years. Today, one can get-go trading in the retail Forex Market using a "demo" or paper trading account with literally no money upfront.
This has likewise given ascent to further proponents such as higher margin, lower or no commissions, bandy rates on open positions to farther aid the retail trader in having a chance at this market.
Further to that, the buying and selling of currency pairs offer merchandise opportunities both in a bullish uptrend marketplace and in a surly downtrend market. More on the concepts of buying and selling volition be covered in our later sessions.
Equally a summary, the benefits of trading in retail foreign exchange are:

Largest Trading Volume

The FX market has a daily combined transactional book of 8 Trillion USD. This is as of the yr 2015 and the volume is constantly increasing.

24 Hour market place

Due to the geographical dispersion of the various markets throughout the world, the market is able to operate "continuously" for 24 hours on a daily basis, except for Saturdays and Sundays.

High Leverage (Credit Terms)

This refers to the amount of Leverage or Margin offered by such brokers. For every trading dollar that you have invested, your banker may typically offer you 100 times leverage, or even more than, which causes the cost of your contracts to be purchased to fall dramatically.
This therefore allows yous to ain big contracts even with express capital, which would have otherwise been impossible if y'all were to hold actual concrete stocks of such instruments.

No Commissions

There are no commissions chargeable when you place or close your FX contract positions. In that location is a chargeable "fee" chosen spread which can be as lilliputian every bit two units at 4 decimal places. When compared to stocks/options, information technology is usually at about 24 units at ii decimal places. What a startling deviation!

Bi-Directional (Recession Proof) Market

Dissimilar the nearly conventional trading instruments such as stocks and bolt, you can sell without owning the contract outset in the FX market place. This can let you to be profitable in both the balderdash (upwards) and carry (downwards) market.

Source : http://world wide web.noafx.com/