The Growing FX Retail Market

The FX market has grown enormously over the past decade.  Smaller initial capital requirements, low transactions costs, and the ability to use high leverage make it alluring to many who are disenchanted with the lackluster performances and scandals of the United States equities market.  Still in its infantile stages, the growing international marketplace, and demand for new and exciting means of investment make this a market of the future.

With more and more countries developing a full and robust economy, the tradable instruments can only grow.  China, already having revaluated its currency, will one day have a free floating currency and join the economic superpowers of the world.  Brazil, Russia, and India also will eventually be economies of substantial size.  Eastern European nations will join the European Union and use the Euro further making the Euro a replacement reserve currency to the United State Dollar.

The daily volume the in the FX market is around $1.9 trillion, compared to the $25 billion traded done by the New York Stock Exchange.  The most heavily traded and liquid currencies are the: United State Dollar, Euro, Japanese Yen, British Pound Sterling, Swiss Franc, Australian Dollar, Canadian Dollar, and the New Zealand Dollar.  Over half of the trading volume takes place during the London hours, leaving about thirty percent for the New York session, and a little less than twenty percent for the Asian session.

The trading is not executed through an exchange like in equities markets.  Anyone can exchange currency with anyone.  This makes it easier to trade and allows traders to get varying prices from counterparties.  Hence the regulation of the FX market is not as developed as the equities markets, but it can be traded twenty-four a day.

To trade this market one needs to open a trading account with one of the online market markers or have a great deal of money to trade directly with banks.  Most online market markers allow you to open an account with only a few hundred dollars.  With the leverage provides, this generally allows you to trade between ten to a hundred thousand units of currency.