The Forex Market

The Forex Market

The Forex market is a cash inter-bank or inter-dealer market established in 1971, when floating exchange rates began to materialize. Today the exchange of currency has expanded from trading floors to home computers. The simplest definition of foreign exchange is the changing of one currency to another and unlike the stock market, one may earn profits whether buying or selling within the currency exchange. In comparison to the daily trading volume averages of $300 billion in the U.S. Treasury Bond market and the less than $10 billion exchanged in the U.S. stock markets, the Forex market is huge. In September 1992, The Wall Street Journal estimated the trading volume at $1 trillion per day. Currently, the Interbank Currency Exchange floats 1.5 trillion dollars, 24 hours per day, guaranteeing banks, brokers, and traders an entry and exit in the Forex market. With the introduction of the Chinese Renminbi, the Interbank Currency Exchange anticipates increasing the float to 2.5 trillion dollars. The Forex market is so huge, that all U.S. markets (The New York Stock Exchange, the NASDAQ, the Chicago Mercantile and the U.S. Treasury Bond market) currently generate the same volume in 90 days to equal what the Forex does in one day.