Forex also known as foreign exchange market or currency market is a place where trading occurs. Official institutions like banks help in buying and selling of foreign currencies occur. You can behave as one party and purchase a quantity of one currency by paying for another. Since currencies vary from one country to another thus Forex plays a significant role in trade amongst different countries.
Forex started in 1970’s and has now evolved as the largest and most liquid financial market in the world. It includes trading between large banks government etc. It is still growing as the volumes in global foreign exchange and other markets are increasing day by day. It helps in easy trading and investment by companies.
Forex is said to be unique majorly because of geographic dispersion and liquidity present in the market. Leverage is used here and it consists of growing trading volumes. It always assures you of maintaining long trading hours with low margins in profit and better service for your customers. It forms the best competitor in present market as trading is world’s biggest market of finance.
Deutsche bank leads in the 2008 survey for top ten currency traders list leaving behind UBS AG and others. Forex is different from stocks and shares market due to the fact that the prices in foreign exchange market are divided into many different levels and are variable. Many banks are a part of daily trading which leads to a big turn over for Forex. Central banks play a vital role in foreign exchange as they control the money supply.
Inflation, interest rates are looked after by them and the banks only stabilises the foreign exchange. Many multi national companies also carry out trading with the help of foreign exchange brokers. Interbank trading can also help them making profit out of this business.