Forex Market Overview

"FX" is an abbreviation of "forex" or "foreign exchange." Foreign exchange is the largest and most liquid market in the world trading approximately $2 trillion every day (that's over 30 times the daily volume of NASDAQ and NYSE combined). The forex market is a cash interbank/interdealer market. In simplest terms, this means the foreign currencies traded in the forex market are traded directly between banks, foreign currency dealers and forex investors wishing either to diversify, speculate or to hedge foreign currency risk. The forex market is not a "market" in the traditional sense due to the fact that there is no centralized location for fx trading activity and, therefore, trades placed in the forex market are considered over-the-counter (OTC). Forex trading between parties occurs through computer terminals, exchanges and over telephones at thousands of locations worldwide. CFOS/FX clients can trade through online forex trading platforms and/or over the telephone directly with a forex broker on our trading desk.

Until recently the forex market has not been available to the small speculator. The large minimum foreign currency transaction sizes and financial requirements left this market in the hands of banks, major foreign currency dealers and the occasional large fx speculator. Now, with the ability to leverage large positions with a relatively small amount of capital (margin), the forex market is now more liquid than ever and available to most investors.

Five major currencies dominate trading in the foreign exchange markets: the U.S. Dollar, Eurocurrency, Japanese Yen, Swiss Franc and British Pound. The foreign currencies are traded in pairs, also known as crosses, in the forex spot market. For example, purchasing the EUR/USD in the forex spot market simply means the purchaser is buying the Eurocurrency and selling the U.S. Dollar in anticipation of the Eurocurrency gaining value in relation to the U.S. Dollar. Similarly, the seller of a EUR/USD contract would be selling the Eurocurrency against the U.S. Dollar. Official figures show the U.S. Dollar is on one side of 83% of all spot foreign exchange transactions. The "spot" market simply refers to a currency contract with a prompt valuation date requiring settlement within two business days.

Over the past several decades, an increase in international trade and foreign investment has made the economies of the world more interrelated. New opportunities for investors have also been created with the fall of communism and the dramatic growth of the Asian and Latin American economies. Today, supply and demand for a particular currency is the driving factor in determining exchange rates. Many factors such as regularly reported economic figures and unexpected news reports, such as disasters or political instabilities, could also alter the desirability of holding a particular currency, thus influencing international supply and demand for that currency. It should come as no surprise that many shrewd investors have already taken advantage of the fluctuation in exchange rates to profit handsomely.

John Nobile - Senior Account Executive
CFOS/FX - Online Forex Spot and Option Brokerage

ABC Online

World Currency Trade Rises 17% to $2.7 Trillion a Day BusinessWeek March 11 (Bloomberg) -- Global currency trading rose to $2.7 trillion a day between April and October, the first growth ... RBA: Global Foreign Exchange Turnover Per Day Rises 17% Between April And ...RTT News AUD/USD: Trading the Change in Australian EmploymentDaily FX all 301 news articles »

World Currency Trade Rose 17% to $2.7 Trillion a Day, RBA Says BusinessWeek March 11 (Bloomberg) -- Currency trading increased between April and October 2009 to $2.7 trillion a day, the first such growth since ...

iFinix Corp. 2010 Outlook CNNMoney.com (press release) Mr. Dank has over 20 years experience in the securities industry, having held senior management positions with futures trading firms, currency trading firms ... and more »

Emerging-Market Debt Trading Volume Up 7% In '09;Still Off High Wall Street Journal In 2008 local currency trading was at $2.837 trillion, representing about 68% of total volume. Brazilian debt was the most frequently traded at $747 billion ... UPDATE 1-Emerging debt trade volumes up 7.0 pct in 2009-EMTAReuters India all 6 news articles »

Australian Market End In Negative Territory Amid China Concerns RTT News The central bank noted that the currency trading rose 17% to $2.7 trillion a day between April and October 2009, citing data from five major foreign ... and more »

AFP	Mexico peso firms on IMF news, Chinese data Reuters [ID:nN10131734] "This comes on top of a series of economic data that could provide a clearer sign of recovery," said Enrique Trejo, head of currency trading ... Mexico asks IMF to renew $48 bln credit lineReuters all 142 news articles »

The Guardian

Curbing derivatives might hurt, not help, Greece The Associated Press ... said President Barack Obama, after a White House meeting Tuesday, offered a "very positive" response to European ideas for restricting currency trading. ... Europe moves to ban trading in credit default swapsWashington Post Defending the Softer Side of the CDS MarketWall Street Journal (blog) Greece's Problem? The New York TimesFOXBusiness (blog) BusinessWeek all 597 news articles »

Trading in forward renminbi surges Financial Times "There has been a huge amount of selling interest at the front end of the market," said Gerrard Katz, head of currency trading at Standard Chartered in Hong ... and more »

Texas resident charged with operating forex Ponzi scheme HedgeWeek ... Jr. and his investment company C & R Financial, both of Houston, Texas, with operating a Ponzi scheme in connection with foreign currency trading. ... and more »

Ruble Gains Versus Dollar as Central Bank Eases Defense on Oil BusinessWeek The Russian currency gained 0.1 percent to 29.7974 per dollar, compared with 29.8394 on March 5, in Moscow trading. It was 0.2 percent higher at 40.3767 per ...