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Buying, selling and dealing with another country's money, stocks and shares is what is known as Forex. While a person is thus trading in foreign exchange, the other country's currency is evaluated against his country's to decide its worth. Generally, a country has a set of rules by which transactions in another country's currency is managed. The governments of the countries itself, business organizations, banks and other financial establishments are the institutions that generally carry out Forex trading. How does Forex market differ from stock market? Unlike the stock market, the activities of which are restricted to one country, a Forex transaction involves two or more countries. It is conducted internationally. Of the two participant countries, one country invests the money and the other country becomes the repository for that money. The Forex dealings are by and large conducted through mediums such as banks. What constitutes the Forex market? The Forex market has within its ambit, many countries and several types of operations. This market is voluminous as substantial amount of money is traded here. The people who operate in this market may deal directly with cash or may buy or sell liquid assets that move quite fast in the international market. Since several countries are involved in it, the range and capacity of the Forex market is much higher than a country's stock market. Trading goes on in this international marketplace round the clock. There are occasions when transactions close by the end of the week but it is not always necessarily so. The business often goes on during weekends also. An astonishingly large number of people participate in Forex transactions. It was estimated that a staggering amount of two trillion dollars was traded on an average per day in the year 2004. This is indeed an exceptionally large amount of money. So the amount of money that is traded in this market each year is surely a mind boggling sum. Trading in Forex is not a financial transaction that is entirely new. It has been going on for more than thirty years. But the advent of computers, especially that of the internet, has immensely boosted this market. The facility of online transaction has made Forex trading very easy. The medium of internet has also spread the information of the existence of this trade market and familiarized people with its intricacies. As of now, Forex constitutes only about 10% of international trading. But its increasing appeal ensures us that it is a field that stands poised for fast growth. |
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