About the Forex market

 Why do many people thinking about a job which can improve their well-being choose a currency trading? Advantages of Forex trading could be seen if simply compare trading formulas: “Money = commodity. Commodity = money + profit - costs”. When trading on the Forex market costs (such as transportation, storage, lease, salary for staff personnel, etc.) which are common for usual “commodity” trading are excluded from the equation. Currency trading formula is rather more simple and effective: “Money = another money = money + profit”.

 Forex (an abbreviation for Foreign Exchange market) has a literal meaning – “international currency exchange”. In the modern business environment Forex is regarded as a complex combination of all trading and investment operations related to exchange of one monetary units of different countries on another at a fixed rate. Among the major Forex market participants are top commercial and investment banks, central banks of different countries, brokerage houses, dealers and other financial structures (such as for example pension funds and insurance companies). Swiss franc (CHF), pound sterling (GBP), USA dollar (USD), Japanese yen (JPY) and Euro (EUR) are generally recognized as major currencies.

Direct profit earning from the Forex trading is based on mechanism of fluctuations in national currencies rates. In this case, it is a national currency that is becoming a commodity or a medium of exchange which is similar, for example, to oil, grains or precious metals that, in turn, has made money a not less popular investment instrument than more usual shares or bonds. Commodity value on the Forex market (that is a value of one national currency to another one) is directly dependent on economic indicators and level of development of currency-issuing countries.

To make a profit from trading one or another currency it is necessary to choose a traded “commodity” correctly and make a right forecast of changes in domestic and foreign economy and in many cases in the policy of the country to which the currency belongs.

Advantage of the Forex market over other financial sectors is also the fact that Forex trading operations are made 24 hours a day and doesn’t stop during all the business week. There are always people who wish to buy or sell a currency in every time zone while the stock market interrupts trading at the end of a business day and begins it only the morning after. Owing to the 24-hours operation Forex market participants don’t need to wait to response to one or another world event like, for example, on the stock market.

 Currency trading has truly a long history. It dates back to thousands years before Christ when first metallic currency appeared in the Ancient Egypt. Currency operations in their familiar form began to develop in the Middle Ages when first international banks employing means of exchange for payment were established. They were absolutely valid to present means of exchange for the third parties which were the only thing that enabled considerable increase of currency operations. During this period the currency market began to develop in his classical representation. Italian moneychangers were the first speculators in foreign currency making profits successfully on exchange of currencies of different countries.

The first stock exchanges were set up already in the XII-XV centuries. In truth they looked like bill fairs rather than stock exchanges at the time. The Amsterdam Exchange set up in the XVII century became the oldest stock exchange in the world. The Royal Exchange was established to the end of the same century. It was the place where traders began to divide into “bulls” and “bears” what can be seen in our days.

The present-day currency market has been formed not long ago – in the twentieth century. It was just a London which was recognized as a centre of currency trading until the mid-1930s. It follows that the British pound was the base currency used for payments and building up reserves. The British pound got a name that speaks for itself greatly – a “cable” (a telegram). This is not surprising because trading was carried mainly by telex and telegraph services.

 It was just an American dollar that became a reserve currency accepted in all capitalist countries after the year 1944 in according with the Bretton Woods Agreement because only the USA economy didn’t suffer in the Second World War. The US dollar was tied to the gold value at the time which was 35 dollars per ounce.

The next symbolic milestone in the history of currency trading was introduction of free floating currency rates in the late 1970s. Just at the time the Forex market took the shape which has been kept until today. Everybody who wished could trade one or another currency and the value of currency became directly dependent on current demand and market supply. Introduction of floating rate increased volumes of trade on the Forex market substantially: it increased from 5 to 600 billion dollars per day only in the first ten years (from 1977 until 1987) and to about 1,5 trillion dollars by the early 21st century.

Technical revolution didn’t pass by a currency trading. Trading mechanism changed throughout all the time from primitive systems of monetary exchange based on “from hand to hand” principle to more complex forms using different technical devices (telegraph, telefax, telephone). There are highly automated dealing systems developed nowadays and adjusted for currency trading by means of the Internet network. Continually developing computer technologies enabled currency trading accessible to more number of individual dealers, ensured improvement of speculators’ trading skills and growth of trading volume as a consequence.

To participate in trading individually today it is necessary to open an account with a Forex dealer and download a trading platform on your computer which enables you to trade with any world currency and to get quotes from leading world providers. Thereby a minimum deposit size has been reduced many times as compared to the one that was necessary to enter the market 10 years ago.

 During decades of professional history of currency trading and exchange auctions their participants were frequently on the spot of ups-and-downs, successes and failures, scientific discoveries and hoaxes. The Forex market has its own legends like every area of human activity. It must be said that there were a great many bright, well-known and memorable legends on exchange auctions which are such emotional and economically significant. Among them there is Lora Pederson who became the youngest trader. Started her career on the Wall Street at the age of 17 she had her own business on the American Stock Exchange by age 20. When she was 24 years old she earned her first one and a half million dollars.

Speaking about legends of the financial world we can’t forget Jessie Livermore (year of 1877). It is he who is considered to be the most successful speculator over the whole history of exchange activities. He made his first transaction at the age of 17 and became a millionaire by age 30. It was he who was able to cause a tremendous market crash in 1907 when he earned three million dollars in just one day. He turned a postulate which stated that “strict discipline is a recipe for success of traders” into an axiom.

There are also histories of success accompanied by incredible explanations. One of them is a story of Robert Prechter who became a winner of the USA Open Real Account Trading Championship in 1984. He was a recognized author of the most successful forecasts of financial markets movements in the 1980s and was in the top five of financial wizards. He used art and pop culture to make his forecasts. He thought that market behavior directly reflects sentiments of masses which in turn are expressed in fashion, music, cinemas and etc. Robert Prechter believed that a future market movement and change could be seen in length of a skirt, color of a tie, popularity of a sport event, styling of buildings and cars. Despite of apparent absurd of his theory R. Prechter remained a successful player on the financial market.

William Delbert Gann is another enigmatic figure in a stock-market game. Get started his career as a trader in the early 20th century he became quickly known as a very talented trader able to predict not only market movements with amazing accuracy but historical and political changes in the world. Despite he stated that his calculations are based only on natural laws comprehensible to everybody who is capable of making the simplest mathematical operations he often used various astrological charts in his work.

George Soros is undoubtedly the most known figure in the world of financial transactions to this date which fortune is currently estimated to cost 11 billion US dollars. Being not only a financier and a successful investor but a philanthropist too he spend approximately 5 billion dollars to charities during all his life. Most commonly he is called a financial speculator and more often he is known as "the Man Who Broke the Bank of England" that created prerequisites for Black Wednesday on 16 of September, 1932.

We may suggest that his financial career began in 1956. G. Soros started to work in the international arbitration that is buying securities in one country and selling them in another country. Soros developed a new method of trading and named it a domestic arbitration which means separate selling of combined securities, shares, obligations and warrants before they might be officially separated from each other.

Soros was successful in financial business for more than forty years. Only in the late 2000s he decided to withdraw his active financial activity and engaged in charity. George Soros made his fortune by bear speculations (“bear” tactics) in the course of which he applied a theory stated that decisions to sell and buy securities are made on the basis of future price expectations. Considering that expectations refer to a psychological category it can be an object of information influence. Attack on a currency of any country consists of consecutive information impacts through mass media and analytical editions in couple with real actions of currency profiteers who stagger financial market.

  Availability of the Internet network enables fast development of Internet trading which ensures distant settlement of financial transactions. To get an opportunity to participate in financial transactions it necessary to have a desktop or a mobile computer with Internet connection and register a trading account in our company.

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