The following figures and facts narrate to the overseas exchange market. The information is attracted from preliminary effects of 2007 Survey of Triennial Central Bank of Overseas Exchange and the Derivatives Market activities that the bank of International Settlement conducts in the month of April 2007 and it was released on 25th September in the year 2007. Nearly 54 Banks and several monetary authorities took part in the survey, collected information from nearly one thousand two hundred and eighty participants in the trading market.
The survey in 2007 shows an unparalleled increase in the activity in traditional overseas exchange trading market when compared to the year 2004. Average regular turnover increased to about $3.2 trillion during April in 2007, a rise of about 71% at recent exchange rate and nearly 65% at repeated rate of exchange. Against a circumstantial of the low levels of the volatility of financial market in an activity of investor group including the hedge capitals, that was partially facilitated by considerable increase in suing prime brokerage and the retail depositors. Marked rise in the technical trading level, most particularly algorithmic trading is likely to have increased turnover in a spot market.
Forex market Background
Foreign exchange goes back to the ancient times when the traders at first started exchanging coins from various nations. However, foreign exchange is a newest of all financial markets. Since hundred years, the overseas exchange has undergone certain dramatic transformations. Bretton Wood Agreement which established in the year 1944 remained complete till early 1970.
At the conference, the representatives from different forty five nations came with each other for discussing future exchange systems. Conference resulted in a formation of an International monetary fund. This created an agreement that the fixed currency in the system of exchange rate that tolerated nearly ten per cent of the fluctuations of currency to the gold values and to dollar that was recognized as Gold Standard.
In a traditional manner, the private dealers only signifies of earning an access to an overseas exchange market was with the help of the banks that handled huge amounts of several types of currencies for the investment and commercial purposes. Volume of trading has been increasing at a rapid rate with moving time, mainly after the rate of exchange were permitted to move in a free manner in the year 1971. During this particular year, i.e. during 1971, Bretton Wood Agreement was at first examined due to an uncontrollable fluctuation of rate of currency, by 1973 gold standard was actually abandoned by the president named as Richard Nixon, the currencies where they were at a final stage allowed for floating in a free manner. Since this particular time period, the overseas exchange at a fast rate established itself in the form of financial market.
Today, Forex trading market being high in demand large numbers of people are today engaging themselves in the forex market. Now, this is one of the easiest and in fact the safest methods of earning huge profits.
The players of Forex Trading Market
Prior the time period, 1998, the overseas exchange marketplace was accessible to huge entities financial currencies for both the investment and commercial purposes with the help of banks, nowadays, online financial platforms of trading and internet permits small financial institutions and several retail investors accessing a same liquidity level as the main overseas exchange banks by providing a huge gateway to the main forex market. The foreign exchange, also known as Forex refers to overseas financial exchange marketplace in which more than four thousand six hundred international banks and several millions of large and small speculators participants all over the world. Each day this trading market which is popular all over the world is known for exchanging over 1.7 trillion dollar in dozens of various currencies. With the recent rate of growth the trading market is predictable to expand over 1.9 trillion dollar each day by 2006.
Structure of the Trading Market
• Decentralized, over the counter trading market, also popularly known as Interbank market
• Main members: Commercial, investment banks and central banks, private speculators, corporations and hedge funds
• Free floating system of currency started in early 1970 and was ratified in the year 1978
• Online trading started in mid to the late 1990’s
Hours of trading
• Trading market opened for 24 hours
• Sunday through Friday
• Trading starts in New Zealand which is followed by Asia, Australia, the Middle East, America and Europe
Size of Forex trading market
• Biggest financial trading market in the whole world
• Nearly $3.2 trillion regular turnover, equals to:
1. Over 10 times average regular turnover of the global equity market
2. Over thirty five times average regular turnover of NYSE2
3. About five hundred dollar each day for each male, female and children on earth3
4. A yearly turnover over ten times
5. Spot trading market accounts for less than one-third of regular turnover
• Nearly two hundred eighty billion dollar
• About eighty seven billion dollar
• Depending on the population of world of about 6.6 billion
• Nearly forty eight trillion dollar
Major Currency Markets
• The markets of US and UK account for more than fifty per cent
• Major trading markets in New York, London and Tokyo
• The market of trading is regarded as the heaviest when the major trading market overlap 5
• About two thirds of the NY activity takes place during morning hours while the European markets are opened 6
• The overseas exchange trading market in United States
• Overseas exchange trading market in United States
Forex trading Technical Analysis generally used technical indicators:
• The moving averages
• Fibonacci retracement
• Pivot point
• Elliott Wave
• Bollinger Bands
US dollar is included in more than eighty per cent of every overseas exchange transaction, which is equal to more than US$2.7 trillion each day
Codes of Currency
1. EUR= Euro
2. USD= US dollar
3. GBP=British Pound
4. JPY=Japanese Yen
5. CHF=Swiss Franc
6. AUD= Australia Dollar
7. CAD= Canadian dollar
Major pair of currency
• Dollar bloc- AUD/USD, USD/CAD, NZD/USD
• Majors: USD/JPY, USD/GBP, EUR/USD
• Important crosses: GBP /EUR, EUR/CHF, EUR/JPY