The term Forex stands for foreign exchange. Basically it is a special financial market assigned for foreign exchange. Roughly translated it means a decentralized market wherein currencies of the numerous countries of the world are exchanged. This over the counter exchange allows two countries to be engaged in business with one another, and the ability to pay each other in the countries’ respective currencies. For example, if India and USA are engaged with each other in business, then USA pays India in rupees the equivalent of dollars. The exchange of currency is a very attractive feature for the companies that operate on both levels. A number of factors have made the Forex a much better trading market that the other financial markets of the world. It is because, it has accessibility of traders in nearly all currencies, heightened sensibility to a large and continuously changing number of factors, that the Forex scores over the other financial markets of the world.
The history of currency can be traced back to the middle Gfarm V2 Ages to people, who devised the plan of this foreign exchange. It began to take place when the merchants discovered the “bills of exchange” that allowed third party payments and therefore lent flexibility to the trading market and market deals. The twentieth century found the development of a steady and contemporary foreign exchange scenario, due to relative stability.
It was during the 1930s that London had a firm foothold in the world economy, and all the currencies of the world were quoted against the British pound. It served as a reserve to keep money. Since during those days telex machines or cables were used in order to make foreign exchanges, the British pound was nicknamed Cable. It was after World War II, when the British economy was completely destroyed, USA dollars became the prominent currency of the world market. As USA was the only country left unscarred by war, it has finally risen to become one of the leading economies in the world and the currencies of the other countries are quoted against the US dollars.
Due the allowance of the free flow of currency against each other, the Forex market has experienced a growth in volume. This particular form of trading is mostly performed in a decentralized manner, and only the currency future and options serve as exceptions. The main factors that influence the growth of volume in foreign exchange are interest rate volatility, Business Internationalization, Increasing of Corporate Interests, and Increasing of Trader’s Sophistication, Developments in Telecommunications, and Computer and Programming Development.
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