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Origins Of The FOREX Market

Forex Trading Abbreviations and Trading Terms - Admiral Markets

The globalized world of today requires greater interaction between different nations, which causes a greater flow of foreign currency. This increase in flow affects the foreign exchange market, making it more liquid and more volatile. In this way, opportunities to generate wealth are presented, taking advantage of currency fluctuations.

The FOREX market is the foreign exchange market. This market has existed since 1971, when the “Bretton Woods” treaty was suspended, in which it had been agreed that the world’s currencies would be pegged to the dollar, and the latter would be pegged to gold. In addition, most people do as of what Babypips is (Babypips คือ which is the term in Thai) in forex, this is just when you are completely clueless in forex. When this treaty was suspended, the currencies of the most developed countries were at the mercy of the forces of supply and demand, opening the opportunity to profit from the rises and falls of one currency against another.

This market for a few years has been gaining a trading volume of $ 800,000,000,000.00 in 1995 until today, having  $ 3,200,000,000,000.00 dollars a day. This represents almost 50 times what is traded on the NYSE (New York Stock Exchange) a day.

Banks And The Forex Market

Interbank trading represents more than 50% of daily transactions in the Forex market. Due to its great relevance in this opportunity, we are going to expose some basic concepts.

Interbank trade is the one that largely covers speculative demand, which represents almost 15% of the market.

Commercial banks have a buying price and a selling price in the Forex market. The difference between both prices (the seller and the buyer) is called the Spread, which represents the commission that the bank takes for acting as an intermediary.

Central Banks also intervene in the Forex market, although with other purposes than Commercial Banks. These act to control the money supply, inflation, and the interest rates of the countries.

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