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The vast currency market is a foreign concept to
the average individual. However, once it is broken down into simple
terms, the average individual can begin to understand the foreign
exchange market and use it as a financial instrument for future
investing.
Forex was created not by design, but because traders, brokers,
bankers, importers, exporters and investors recognized opportunities
it brings. In 1971, the U.S. went off the "gold standard,"
in which its foreign-exchange rate was pegged to the price of gold.
At that moment, new trading opportunities appeared on the horizon.
Forex is the one stabilizing factor in the world's system of monetary
exchange, yet it is not answerable to any extrinsic stabilizing
influence. There are "no restrictions" in this market.
No single international authority acts as a governing body, and
no government can intervene unilaterally to regulate foreign exchange
practices or, should there be a threat of world monetary crisis,
halt trading. While treasury officials in Washington, London, Bonn,
Tokyo and other capitals pay close attention to relative currency
values, none can intervene in a regulatory capacity. The market
exists only to the extent those traders in Asia (Tokyo, Hong Kong
and Singapore), Europe (Frankfurt, London, Paris and Geneva), Bahrain,
and the U.S. (New York), New Zealand and Australia (Sydney) are
willing to buy and sell.
Foreign Exchange is the simultaneous buying of one currency and
selling of another. The foreign exchange market (FOREX) is the largest
financial market in the world, with a volume of over $1.5 trillion
daily. Unlike other financial markets, the Forex market has no physical
location, no central exchange. It operates through an electronic
network of banks, corporations and individuals trading one currency
for another. The lack of a physical exchange enables the Forex market
to operate on a 24-hour basis, spanning from one time zone to another
across the major financial centers. Trading in the currency market
offers tremendous flexibility when confronted with a global catastrophe.
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