“FX” is an abbreviation for “forex” or “currencies”. The forex market is the largest and most liquid market in the world, trading approximately $ 2 trillion per day (that’s more than 30 times the daily volume of NASDAQ and NYSE combined). The forex market is an interbank / interventional cash market. In simpler terms, this means that currencies traded on the forex market are traded directly between banks, currency traders, and currency investors who wish to diversify, speculate, or hedge currency risk. The forex market is not a “market” in the traditional sense due to the fact that there is no centralized location for forex trading activity and therefore transactions carried out on the forex market are considered over the counter (OTC). ). Currency trading between the parties is conducted through computer terminals, exchanges, and by telephone at thousands of locations around the world. CFOS / FX clients can trade via online forex trading platforms and / or by phone directly with a forex broker at our trading desk.
Until recently, the forex market was not available to the small speculator. Large minimum volumes of foreign currency transactions and financial requirements left this market in the hands of banks, major currency traders, and the occasional large currency speculator. Now, with the ability to tap into large positions with a relatively small amount of capital (margin), the forex market is now more liquid than ever and available to most investors.
Five major currencies dominate trading in the currency markets: the US dollar, the Eurocurrency, the Japanese yen, the Swiss franc, and the British pound. Foreign currencies are traded in pairs, also known as crosses, on the spot foreign exchange market. For example, buying the EUR / USD on the spot currency market simply means that the buyer is buying the euro currency and selling the US dollar in anticipation of the euro currency increasing in value relative to the US dollar. Similarly, the seller of a EUR / USD contract would be selling the Euro currency against the US dollar. Official figures show that the US dollar is on the side of 83% of all spot currency transactions. The “spot” market simply refers to a foreign exchange contract with an immediate valuation date that requires settlement within two business days.
During the last decades, the increase in international trade and foreign investment has made the world’s economies more interrelated. New opportunities have also been created for investors with the fall of communism and the spectacular growth of the Asian and Latin American economies. Today, the supply and demand for a particular currency is the determining factor in determining exchange rates. Many factors, such as regularly reported economic numbers and unexpected news such as disasters or political instabilities, could also alter the desirability of owning a particular currency, influencing the international supply and demand for that currency. It should come as no surprise that many astute investors have already taken advantage of fluctuating exchange rates to make huge profits.