WHAT IS FOREX?
The Forex market, established in 1971, was created when floating exchange rates began to materialize. The Forex market is not centralized, like in currency futures or stock markets. Trading occurs over computers and telephones at thousands of locations worldwide.
The Forex market, which is the exchange of one currency to another, is the largest market in the world. In comparison, the US stock market may trade $10 billion in one day, whereas the Forex market will trade up to $3.2 trillion in one single day.
The largest foreign exchange activity is the spot exchange (i.e.., Immediate) between the US dollar and four other major currencies: British Pound, Japanese Yen, Eurodollar and the Swiss Franc. These four currencies are bought and sold against the US dollar.
Up until 1998 this was the exclusive market of the banks and large institutions that traded currencies among themselves, reaping huge profits. Wonder why the Banks and Insurance companies have the biggest buildings downtown?...currency trading.
In a recent article in the Wall Street Journal, Daimler Chrysler made more money in one quarter trading foreign currency than selling cars. Think of it, if the big companies are doing it, it is definitely the trend to follow. Now thanks to the Internet it is possible for anyone to get involved in the same trading, at their own level... with at their own risk.