Currency And Trading And Program

Currency And Trading And Program

Currency And Trading And Program

The foreign exchange market is truly a global market place. Currencies are traded around the globe on virtually a 24/7 basis. There are three principal avenues, or venues, available to the foreign exchange market participant, whether you are a hedge account or speculator; the spot or cash market, the forward market and the futures market. The first two are an over-the-counter dealer market while futures are traded on an exchange.

Growth of the Foreign Exchange Market

Growth in the foreign exchange market has been nothing short of remarkable. Annual trading volume has expanded from not quite $30 trillion annually in 2002 to now well in excess of $70 trillion. The two principal factors that have led to this growth are the globalization of international investment activity and electronic trading.

While corporate participation has remained flat over the past several years at roughly $11 trillion, the major expansion in volume has come from financial institutions (fund managers, hedge funds and banks) and retail investors. To be candid, retail participation in this market is fairly new with an unknown tenure or tenacity at this point and tends to focus on the spot market as opposed to the forward or futures market.