Currency – the largest, most dynamic market in the world. About 1.88 trillion dollars of currency is traded daily in a market that literally does not sleep. Traders who deal in the center of Tokyo, London and New York trade freely across borders and time zones, even in a multiple order of $ 1 million, the transaction, which occupy less than a second.
A Forex market development in its current form has left him virtually unrecognizable from 10 years ago. Then the banks are considered currency on behalf of their clients via traders holding multiple telephone conversations or perhaps using the relatively new electronic systems offered by Reuters and electronic brokerage services (EBS). But today, customers can deal with a number of banks on a number of platforms and the quiet hum of computers has accepted the noise level of trading platforms.
"Old-timers" complain that a lot of "face" merged with the rise of faceless trading systems. But whatever, she marketplace is now more vigorous than it was then. Many banks and trading platforms have reported ill growth of recent trades. And, given a slight increase in market share, most believe that the overall trading activity increased, as the transparency of the market, and access to improved where it is much easier to see what each.
EBS has recently announced that half of its top 35 busiest shopping days of the launch of the company 10 years ago, had the first two months of 2004. Reuters said that in 2003 there is an increase of 35 percent compared with 2003. and in the same year it is supposed to be about the & # 39; the volume of spots was 50 percent more than a year ago.
As a Forex comes into its own!
«FX matured as an asset class over the past five years," says Nick Beecroft, head of currency trading at Standard Chartered. "There is much more activity from active hezherov and by asset managers in other classes who tend to worry about FX much more than they did five, let alone 10 years ago."
Then the market basically consisted of direct transactions between banks. Introduced technologies have been developed to replicate these direct transactions. Approximately 50% of transactions with foreign currency consisted of conversations between two counterparties, and 35% – through voice brokers, who "matched" bids and offers, not knowing who was the contractor.
In other words, there was no "transparency" in the market, because nobody ever knew that someone really does!
Reuters launched its first based on the 1982 screen system, and in 1989 followed him with conversational platform, the phone adopts the dealer trades. In 1992 he went to live with the appropriate system, designed to reflect the role of voice brokers. according to EBS platform it was launched in 1993 in an attempt by banks to curb the development of Reuters & # 39; a monopoly position.
Creating electronic brokingu on the interbank market has allowed smaller banks that never had easy access to the best prices, the ability to accommodate larger banks on an even keel because of the transparency of the prices of electronic currency. Today, only a few specialist voice brokerage firm is still working, and the bulk of interbank business flows and the Reuters platform EBS in.
Look Mom … nope Banks!
Since then, however, there was another earthquake in the Forex market … access to transparent prices for people outside the good old boy banking world.
You can get the market prices in real time, which pass through your desktop!
Web-based platform, such as Track N »Trade Forex give anyone Gecko Software, with an Internet connection opportunity to receive quotes for any major currency pair and make a trade just by itself. And, the counterparty could just as easily be another fund manager as a bank!
"The market has changed over the past three years than the previous seven," says John Nelson, head of Global FX markets at ABN Amro. "One hit the key will send a trade with the back-office of the counterparty and settle in the back of the other almost instantly."
And it's fast delivery price is now leveled the playing field, and expanded coverage of FX trading well beyond the core investment banking market.
"What differentiated banks from customers was that the party could see the real market prices, and the clients can not fast forward, and I see how the market prices in real time flow through my desk." – says Justin Trenner , CEO of the customer knowledge, an independent research firm. "This greatly facilitates the more sophisticated fund managers in actively trading FX as an asset class."
But beware …
… not a day trade this material, because next instant dissemination of news, data and information on prices has meant that the market theorists call high efficiency – the exact price at any time. This has influenced the way currency pairs move.
"The trend you get more ridge and head than before, because everyone responds to every bit of news at the same time", – said Chris Fyurys, senior currency strategist at issues of economic consultancy 4Cast, who compared the current behavior with a school of fish. that all changes of direction at the same time.
But the advantage of a sharp price movement during the day, especially in the last two years – a large common volatility, from which you can earn money if you catch the general long-term trend of growth or care and go with ADR shares – International stock is traded on the NYSE!
"Having absorbed the uncertainty surrounding the launch of the euro and, in spite of the reduction in the number of traders, it is a very healthy time to market", – said Mark Robson, director of treasury and fixed income Reuters.
As a result, new trading opportunities with the & # 39, new direct players, as the price of game conditions equaled. Now, many smaller banks retreated to the sidelines.
Once again, they can specialize in their regional currency, but they are often customers of large banks because of the expense of a new wave of commercial technologies.
Few banks with the deepest pockets have developed and operate with their own successful e-commerce platforms, increase of & # 39; the volume of trade and profit. In turn, they can allow customers to offer customized products, which are becoming the norm.
"Intense competition in this space means that each person is trying to be different by setting" – says Joe Noviela, Chief Information Officer at e-speed Internet platform Cantor Fitzgerald.