FX Currency Trading
FX currency trading takes place round the clock because it is a global thing and some part of the world is always working. When the trading day in Singapore and Hong Kong is closing, it is just opening in London.
By the time the trading day opens in New York, London is half way through. This is why people in FX currency trading need to be vigilant throughout the day to keep track of world events that might affect the value and flow of currency.
It is quite common to find FX currency trading taking place for up to $500 million per day. The US Federal Reserve estimates that more than $1.5 trillion are traded per day. This is much higher than the daily profits from US government securities that represent the 2nd largest world market. The market activity may be judged from the fact that currency rates could change as many as 18,000 times during the day while changes in quote price may happen 20 times a minute.
The FX currency trading market involves the trading of more than a trillion dollars globally. FX currency trading may be carried out in cash (spot), futures, forwards, and options. Most of the transactions in FX currency trading take place between banks though recent times have seen increasing number of asset managers and hedge funds taking part in this market as well.
There are several factors that influence FX currency trading and these include not only political and economic changes but also technology and structural changes in a given industry.
After many years of decline the volume of FX currency trading is once again rising steadily. It is believed that the introduction of the Euro and banking consolidation are responsible for the downward trend whereas the introduction of new players as well as the inherent volatility in this currency exchange market have both combined to turn things around.
FX currency trading was revolutionized in the 1980s when Reuters invented the electronic market that offered increased transparency as well as liquidity. Before this, most FX currency trading took place via telex and telephone but now it was possible to trade a lot faster.
The next major revolution in terms of FX currency trading availability and speed came about with the popularity of the Internet and related technologies. Since communication was faster and more reliable, big institutions like banks could involve their treasury customers from anywhere on the planet to trade more efficiently.
Due to the high degree of competition today, offering the complete range of FX currency trading services is only possible for huge banks. The smaller banks have to become customers of their bigger brothers to provide those services to their own customers.
Reuters has always been on the forefront of providing assistance with FX currency trading.
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