What is Forex ?

FOREX is the world's largest and most liquid trading market. Many consider FOREX as the best home business you can ever venture in. Even though regular people have had the opportunity to take part in trading foreign currencies for profit (in the same way banks and large corporations do) since 1998, it is just now becoming the cool, hip, new "thing" to talk about at parties, business events, and other social gatherings.

Even though it has been somewhat of a loosely guarded secret, every day more and more investors are turning to the all-electronic world of FOREX trading for income and profit because of its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities.

But, still, whenever something seems new or is just becoming a part of social conversation, news articles, and water cooler gossip, misconceptions have to be overcome, the mind has to be open and the slate has to be clear for starting out fresh with the CORRECT information.So, in this article, it is my attempt to give you some solid, but not over-detailed, information on just what the heck "FX" (FOREX) means, what it is, and why it exists.

As a successful trader said, Trading FOREX is like picking money up off the floor. Not trading FOREX is like leaving it there for someone else to pick up." Others in the industry have also said,

Trading FOREX is like having an ATM machine on your own computer.Here's an explanation (one I feel you'll appreciate) of what FOREX is and how a bunch of traders, profit from it:

The Foreign Exchange Market, also referred to the "FOREX" or "FX" market, is the spot (cash) market for currency.

But, don't mistake FX as trading the futures market, where you buy a contract to purchase a particular currency at a future price in time.What FX traders do is much less risky than trading currencies on the futures market, much more profitable, and a lot easier, than trading stocks.So, you're probably wondering where it's at ... or ... how to access the FX market?

The answer is: FX Trading is not bound to any one trading floor and is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.

Yes, if that's the first time you've heard about an all-electronic market, I know this may sound somewhat intriguing to you.

Here's what you are actually trading when you participate in the Foreign Exchange (FOREX) market:

Essentially, like the large banks who use the FX market to protect themselves from the fluctuating exchange rate of different currencies, as an investor, what a FX trader is doing is simultaneously exchanging one countries currency for another. So, in actuality, they're electronically trading a currency-pair and the price that is quoted to us is the exchange rate between the two currencies.In other words, simply the quoted price is how many of the one currency is worth 1 of the other currency.

Example:

EUR/USD last trade 1।2850 - One Euro is worth $1।2850 US dollars

The first currency (in this example, the EURO) is referred to as the base currency and the second (/USD) as the counter or quote currency।The FOREX has a DAILY trading volume of around $1।5 trillion dollars - 30 times larger than the combined volume of all U।S। equity markets। This means that 1,498,574 skilled traders could each take 1 million dollars out of the FOREX market every day and the FOREX would still have more money left than the New York Stock exchange every day!The FOREX plays a vital role in the world economy and there will always be a tremendous need for the FOREX। International trade increases as technology and communication increases। As long as there is international trade, there will be a FOREX market। The FX market has to exist so a country like Japan can sell products in the United States and be able to receive Japanese Yen in exchange for US Dollar।There's plenty of money to be made using FOREX for plenty of traders that use the right trading techniques / tactics that will allow them to profit immensely. And, with only 5% of the daily turnover of volume coming from banks, government and large corporations who need to hedge, the other

95% is for speculation and profit.

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Cairo & Alexandria Stock Exchange

Egypt's Stock Exchange (CASE) comprises two exchanges, Cairo and Alexandria, both of which are governed by the same board of directors and share the same trading, clearing and settlement systems. In March 2009, the 30 largest companies being traded, CASE 30 Index, changed its name to EGX 30 Index. The Alexandria Stock Exchange was officially established in 1883, with Cairo following in 1903.

Both exchanges were very active in the 1940s, and the combined Egyptian Stock Exchange ranked fifth in the world. The central planning and socialist policies adopted in the mid 1950's led to the Stock Exchange's dormancy between 1961 and 1992.

In the 1990s, the Egyptian government's restructuring and economic reform program resulted in the revival of the Egyptian stock market, and a major change in the organisation of the Cairo and Alexandria Stock Exchanges took place in January 1997 with the election of a new board of directors and the establishment of a number of board committees.

Under the chairman at that time, Sherif Raafat, the board of directors determined to modernise the Exchange. Steps taken since then have included:

• creating a coherent organisation structure with clear division of authority and responsibilities
• deciding to install a new state-of-the-art trading, clearing and settling system conforming to international standards (In May 1998 a contract was signed with EFA Software Ltd., a Canadian company, to this end)
• developing new membership and trading rules, and arbitration and dispute resolution procedures
• Planning the improvement of the clearing, settlement and payment systems

By the end of November 1998, these efforts had started to bear fruit and there were 833 listed companies on the Egyptian Stock Exchange with a market capitalization of approximately L.E. 71.3 billion (up from 627 companies listed in 1991 with a market capitalization of L.E. 8.8 billion).

SIX Swiss Exchange

SIX Swiss Exchange (formerly SWX Swiss Exchange), based in Zürich, is Switzerland's principal stock exchange (the other being Berne eXchange). SIX also trades other securities such as Swiss government bonds and derivatives such as stock options.

The main stock market index for the SIX Swiss Exchange is the SMI, the Swiss Market Index. The index consists of the 20 most significant equity-securities based on the free float market capitalisation.

The Swiss Exchange was the first stock exchange in the world to incorporate a fully automated trading, clearing and settlement system in 1995. The exchange is controlled by an association of 55 banks. Each of these banks have equal voting rights in the matter of decision making concerning the management and regulation of the exchange.

SIX is the joint owner of Eurex, the world's largest futures and derivatives exchange along with their German partners Deutsche Börse. In July 2004 however the SIX rejected a merger proposal from the German company, that analysts anticipated as profitable for many small companies enlisted on the SIX.

The exchange has a blue-chip index as its principal stock market index. The Swiss Market Index (SMI) comprises a maximum of twenty of the largest and most liquid large and mid-cap SPI stocks.

Shanghai Stock Exchange

The Shanghai Stock Exchange (SSE) (simplified Chinese: 上海证券交易所; traditional Chinese: 上海證券交易所; pinyin: Shànghǎi Zhèngquàn Jiāoyìsuǒ) is a Chinese stock exchange or bourse that is based in the city of Shanghai. It is one of the three stock exchanges operating independently in the People's Republic of China, the other two are the Shenzhen Stock Exchange and the Hong Kong Stock Exchange. Unlike the Hong Kong Stock Exchange, the Shanghai Stock Exchange is still not entirely open to foreign investors^[1] due to tight capital account controls exercised by the Chinese mainland authorities.^[2]

At the end of 2007, the Shanghai Stock Exchange had 860 listed companies with a combined market capitalization of US$3.7 trillion^[3], making it the largest in mainland China and sixth largest in the world. The current exchange was re-established on November 26, 1990 and was in operation on December 19 of the same year. It is a non-profit organization directly administered by the China Securities Regulatory Commission (CSRC).

Philippine Stock Exchange

The Philippine Stock Exchange (Filipino: Pamilihang Sapi ng Pilipinas) (PSE: PSE) is one of the two stock exchanges in the Philippines, the other one being the Philippine Dealing Exchange. It is the primary stock exchange in the Philippines. Aside from being one of the major stock exchanges in Southeast Asia, it is also the first and the longest one operating since 1927. As of 31 December 2007, the Philippine Stock Exchange had 244 listed companies with a combined market capitalization of $103 billion.^[1]

It currently maintains two trading floors, one in Makati City's Central Business District and one at its headquarters in Pasig City. It is presently composed of a 15-man board, chaired by former Supreme Court Justice Jose Vitug, an independent director, who was reelected a 4th time on May 18, 2008 (since July 2005). Francis Lim was reelected to a 5th term as president since 2004.^[2]

The PSE is known for having one of the shortest trading hours of any stock exchange in Asia, only trading from 9:30 am to 12:30 pm PST.^[3] A two-hour long afternoon trading session is set to be added to the PSE trading day by June 30, 2009.^[4]

Osaka Securities Exchange

The Osaka Securities Exchange Co., Ltd. (株式会社大阪証券取引所 ,Kabushiki-gaisha Ōsaka Shōken Torihikijo^?, OSE) (Hercules: 8697) is the second largest securities exchange in Japan, in terms of amount of business handled. As of 31 December 2007, the Osaka Securities Exchange had 477 listed companies with a combined market capitalization of $212 billion.^[1] The Nikkei 225 Futures, introduced at the Osaka Securities Exchange in 1988, is now an internationally recognized futures index. In contrast to the Tokyo Securities Exchange, which mainly deals in spot trading, the Osaka Securities Exchange’s strength is in derivative products today OSE is the leading Derivatives Exchange in Japan and it was the largest futures market in the world in 1990 and 1991. According to statistics from 2003, the Osaka Securities Exchange handled 59% of the stock price index futures market in Japan, and almost 100% of trading in the options market. Osaka Securities Exchange Co., which listed on its Hercules market for startups in April 2004 is the only Japanese securities exchange which went public on its own market.

In July 2006 OSE launched their newest futures contract the Nikkei 225 mini which is one tenth of the size of the original Nikkei 225 Futures contract and highly popular among Japanese individual investors. In September 2007 OSE established evening session for Stock Index Futures and Options.The trading hours is from 16:30 to 19:00 (JST. 7:30-10:00 in UTC).^[2]

Bombay Stock Exchange

The Bombay/Mumbai Stock Exchange Limited (Marathi/Hindi: मुंबई शेयर बाज़ार Mumbaī Śeyar Bāzār) (formerly, The Stock Exchange, Mumbai; popularly called The Bombay/Mumbai Stock Exchange, or BSE) has the greatest number of listed companies in the world, with 4700 listed as of August 2007.^[1] It is located at Dalal Street, Mumbai, India. On 31 December 2007, the equity market capitalization of the companies listed on the BSE was US$ 1.79 trillion, making it the largest stock exchange in South Asia and the 12th largest in the world.^[2]

Around 6,000 Indian companies list on the stock exchange,^[3] and it has a significant trading volume. The BSE SENSEX (SENSitive indEX), also called the "BSE 30", is a widely used market index in India and Asia. Though many other exchanges exist, BSE and the National Stock Exchange of India account for most of the trading in shares in India.

Montreal Exchange

The Montreal Exchange or M-X (Bourse de Montréal, formerly Montreal Stock Exchange (MSE)) is a futures exchange, located in Montreal, that trades in derivatives such as futures contracts and options. It has been located since 1965 in the Tour de la Bourse (Stock Exchange Tower), Montreal's third-tallest building.

On December 10th, 2007 TSX Group announced that it had acquired Montreal Exchange Inc. for C$1.31 Billion^[1][2][3] The acquisition was completed on May 1, 2008 and the corporation subsequently was renamed TMX Group Inc. ^[4][5]

Borsa Italiana

The Borsa Italiana S.p.A., based in Milan, is Italy's main stock exchange. It was privatised in 1997 and acquired by the London Stock Exchange in 2007. In 2005, the companies listed on the Borsa were worth US$890 billion.

Bolsa de Madrid

Bolsa de Madrid (Madrid Stock Exchange) is the largest and most international of Spain's four regional stock exchanges (the others are located in Barcelona, Valencia, and Bilbao) that trade shares and convertible bonds and fixed income securities, and both government and private-sector debt. Bolsa de Madrid is owned by Bolsas y Mercados Españoles.

Hong Kong Stock Exchange

The Hong Kong Stock Exchange (traditional Chinese: 香港交易所, also 港交所 (HKEX), SEHK: 0388) is the stock exchange of Hong Kong. The exchange has predominantly been the main exchange for Hong Kong where shares of listed companies are traded. It is Asia's third largest stock exchange in terms of market capitalisation, behind the Tokyo Stock Exchange and the Shanghai Stock Exchange. As of 31 December 2007, the Hong Kong Stock Exchange had 1,241 listed companies with a combined market capitalisation of $2.7 trillion.^[1] Hong Kong Exchanges and Clearing is the holding company for the exchange.

Frankfurt Stock Exchange

The Frankfurt Stock Exchange (German: FWB Frankfurter Wertpapierbörse) is a stock exchange located in Frankfurt, Germany.

The Frankfurt Stock Exchange is one of the biggest and most efficient exchange places in the world. It is owned and operated by Deutsche Börse, which also owns the European futures exchange Eurex and clearing company Clearstream.

The Frankfurt Stock Exchange has over 90 percent of turnover in the German market and a big share in the European market. Here the Frankfurt Stock Exchange floor trading loses, but in fast developing and expanding electronic trading (Xetra trading system) the FSE gains in European and international trade: partner-exchanges adopted the Xetra (trading system) (as the Vienna Stock Exchange in 1999, the Irish Stock Exchange in 2000 and the Budapest Stock Exchange in 2003); consolidation continues.

Mainly through Xetra, the German stock market has been opened to foreign investors and market participants. About 47% of the 300 market participants in Frankfurt come from abroad.

The trading indices in Frankfurt are DAX, DAXplus, CDAX, DivDAX, LDAX, MDAX, SDAX, TecDAX, VDAX and EuroStoxx 50.

Trading runs from 09:00 to 17:30 with closing auction from 17:30-17:35. In November 2003, Late DAX was introduced running from 17:45 to 20:00 and in 2006 X-DAX was introduced running from 17:45-22:00 (in line with US trading hours).^[1]

New York Stock Exchange

New York Stock Exchange is an equity (stock) exchange located at 11 Wall Street in lower Manhattan, New York, USA). It is the largest stock exchange in the world by dollar value of its listed companies' securities.^[3] As of October 2008, the combined capitalization of all domestic New York Stock Exchange listed companies was US$10.1 trillion.^[4]

The NYSE is operated by NYSE Euronext, which was formed by the NYSE's 2007 merger with the fully-electronic stock exchange Euronext. The NYSE trading floor is located at 11 Wall Street and is composed of four rooms used for the facilitation of trading. A fifth trading room, located at 30 Broad Street, was closed in February 2007. The main building, located at 18 Broad Street, between the corners of Wall Street and Exchange Place, was designated a National Historic Landmark in 1978,^[5] as was the 11 Wall Street building.^[2][6][7]

Lima Stock Exchange

The Bolsa de Valores de Lima (BVL) is the stock exchange of Peru, situated in the capital Lima. It has several indices. The IGBVL (Indice General Bolsa de Valores) is a value-weighted index that tracks the performance of the largest and most actively traded stocks on the Lima Exchange.^[1].

Other indices are ISBVL (Indice Selectivo Bolsa de Valores) and ISP-15 (Indice Selectivo Peru-15)

Bolsa de Valores de Colombia

The Bolsa de Valores de Colombia, also known as BVC, is the principal stock exchange of Colombia. It was created on July 3, 2001 by the union of three extant stock exchanges in Colombia: Bolsa de Bogotá, Bolsa de Medellín and the Bolsa de Occidente in Cali.

The company maintains offices in Bogotá, Medellín and Cali.

Mexican Stock Exchange

The Mexican Stock Exchange (in Spanish: Bolsa Mexicana de Valores, BMV) is Mexico's only stock exchange. It is headquartered on the prestigious Paseo de la Reforma in central Mexico City. It is the second largest stock exchange in the Latin America. The total value of the Mexican Stock Exchange is estimated to be over US $600 billion. ^[1]

American Stock Exchange

NYSE Alternext U.S., formerly known as the American Stock Exchange (AMEX) is an American stock exchange situated in New York. AMEX was a mutual organization, owned by its members. Until 1953 it was known as the New York Curb Exchange.^[4] On January 17, 2008 NYSE Euronext announced it would acquire the American Stock Exchange for $260 million in stock.^[5] On October 1, 2008, NYSE Euronext completed acquisition of the American Stock Exchange.^[6] Before the closing of the acquisition, NYSE Euronext announced that the Exchange will be integrated with Alternext European small-cap exchange and renamed NYSE Alternext U.S.^[7]

The First Stock Exchanges

In 11th century France the courtiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. As these men also traded in debts, they could be called the first brokers.

Some stories suggest that the origins of the term "bourse" come from the Latin bursa meaning a bag because, in 13th century Bruges, the sign of a purse (or perhaps three purses), hung on the front of the house where merchants met.

However, it is more likely that in the late 13th century commodity traders in Bruges gathered inside the house of a man called Van der Burse, and in 1309 they institutionalized this until now informal meeting and became the "Bruges Bourse". The idea spread quickly around Flanders and neighbouring counties and "Bourses" soon opened in Ghent and Amsterdam.

In the middle of the 13th century, Venetian bankers began to trade in government securities. In 1351, the Venetian Government outlawed spreading rumors intended to lower the price of government funds. There were people in Pisa, Verona, Genoa and Florence who also began trading in government securities during the 14th century. This was only possible because these were independent city states ruled by a council of influential citizens, not by a duke.

The Dutch later started joint stock companies, which let shareholders invest in business ventures and get a share of their profits—or losses. In 1602, the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds. In 1688, the trading of stocks began on a stock exchange in London.

On May 17, 1792, twenty-four supply brokers signed the Buttonwood Agreement outside 68 Wall Street in New York underneath a buttonwood tree. On March 8, 1817, properties got renamed to New York Stock & Exchange Board. In the 19th century, exchanges (generally famous as futures exchanges) got substantiated to trade futures contracts and then choices contracts.

There are now a large number of stock exchanges in the world.

Stock exchange

A stock exchange, (formerly a securities exchange) is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks (see stock valuation).

There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that derivatives and bonds are traded. Increasingly, stock exchanges are part of a global market for securities.