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What Is The Forex Market And Why Should I Care?

We're not going to take a deep dive into Wall Street, interest rates, computer trading, or economic indicators, folks. We'll just cover the basics here so that you can nod intelligently the next time you meet an investment banker at a dinner party.

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Forex - the easy bits.

Did you know the foreign exchange market is the largest financial market in the world? Also known as the Forex market (or FX), it has an enormous turnover rate every day.

And it never stops.

Its rapid expansion and popularity has grown exponentially over the years, thanks to online trading. Millions of international traders use the opportunity to place Forex trades to speculate and hedge against risk.

Many people may not be interested in the Forex market. They consider it to be a 'boring' industry, because of complex terminology like: stochastic analysis, pips, margin, leverage, etc.

However, according to our friends at VPSI forex affiliates, if you dig a bit more, you can find some truly interesting stuff about Forex market, like:

- Online Forex trading has a value of more than $5.4 trillion per day! Being the largest single market in the world, Forex turnover is equal to the entire US GDP for every three days.

- The trading frequency of Forex accounts for about 73% of all the equity trades in the United States. If we consider the futures market, Forex trading accounts for more than 60% of every trade.

- Did you know 16% of all the global Forex trades are carried out by Citibank alone? Most of us might be thinking that the biggest traders are central banks only. But this is not true. After Citibank, it is Deutsche Bank under 16% and Barclays Investment Bank at under 11%.

- The US dollar accounts for the highest percentage of all Forex trades, say about 87% of trades involve the USD. Even though there are many other major currencies like Euro, Yen, AUD, pound, etc., the US dollar is still king. (Next, comes the Euro, but it will be only around 40% of that of the US dollar.)

- Another fascinating fact about foreign exchange trading is that all online trades take only billionths of a second. In 2015, the proposed online trade measuring time in the European Union was down to 1 nanosecond or one billionth of a second! It was proposed by European Securities and Markets Authority. This speed is the reason behind why trades need to get timestamped so soon. Thus, we can avoid market manipulation using sophisticated online trading platforms.

- You might have heard that Forex trading is volatile, and it can be, but it isn't responsible for the biggest financial fall ever. That occurred in the Dow Jones Industrial Average (DJIA). On May 6, 2010, online trading wiped off 998.5 points of the Dow Jones Industrial average within a few minutes. Initially, it was considered as a high -frequency trading problem, but the real reason was a single trader who had made 4.1 billion futures contract sale online. Yes, Waddel & Reed Financial was the reason behind this problem.

Forex is the only one real global market that will never sleep, excluding weekends! Well, you may start thinking that Forex is not that boring after all!

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