The FOREX Market

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The FOREX Market

The foreign exchange market, or ‘forex’ market, is becoming increasingly popular in a wide variety of applications. Everyone knows that countries have currencies and they are traded against one another, but few realize the economic significance of these markets in their daily lives, and also there are many myths and rumors surrounding the forex market. In addition, few realize how to get involved in the forex market, and become discouraged when getting the wrong answers.

The forex market by nature is de-centralized because there is no official currency exchange such as for equities or commodities. On some exchanges, such as the CBOT, forex futures are traded as commodity contracts. However there is nothing stopping any bank from trading currency with another bank, with the CBOT, or with retail customers. There are no rules or regulations, and thus, there are many different opinions and packaging surrounding forex markets that are always disputed. The regulators in the US markets, such as the NFA, have stepped into take action involving forex trading, and provide limited rules to follow. It should be noted however that these regulators are involved only when you accept funds from the public. If you are a bank and have no customers, there are no regulations to follow regarding how to trade currency. The regulators are concerned only how you raise money from the public. [More...]