Who Can Participate in Forex Trading?

Posted on December 3, 2009
Filed Under currency trading | Leave a Comment

The short form of Foreign Exchange is FOREX. Even it can be termed as FX. In 1971 the global trade was shifted from fixed exchange rates to floating rates. This change in the market has laid deep roots for the emergence of FOREX trading. A simultaneous buying and selling of currencies of two different countries is the main activity of FOREX.

The main objective of foreign exchange market is to help international trade and investment. FOREX market has more daily volume of buyers and sellers compared to any other market in the world. This has made the FX market as an exciting trade to work with.

In the beginning FOREX was termed as interbank market as it was dominated by the banks and financial institutions like central banks, commercial banks & investment banks. In the next stage wealthy investors and fortune 500 companies have become a part of this trade. At this time this currency market was financially inaccessible to general public, investors and traders because the minimum amount requirements for the account were beyond the resources of average investor. Later the scenario has changed and even and average investor could able to access the trade.

Finally we can divide all the participants of the foreign exchange market into 3 groups:

First group consists of individual traders, means the general public who invest their own money using some brokerage to middlemen. Millions of individual and independent traders come under this category.

Second groups constitutes banks and financial institutions like Bank of America, Morgan Stanley, First Boston, Goldman Sachs, HSBC, J.P Morgan, UBS Warburg and Dean whiter etc., Banks and financial institutions move huge contracts among themselves making almost 50% of FOREX market.

Third group states about Fortune 500 companies, big and middle level corporations, import /export companies etc.

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