Forex Trande

A legacy of innovation and entrepreneurshipIn the late 1990s, a group of American entrepreneurs saw the future oftrading. Over-the-counter (or “off exchange”) foreign exchange tradingwas generating significant profits for large banks and corporationsand, likewise, it lured individual traders who were increasinglybecoming interested in participating in this large, but seeminglyclosed, market.However, individuals with relatively small capital and no access toproprietary bank-to-bank computer systems were only able to tradecurrencies as futures through two exchanges. There was no method fortraders to participate in the over-the-counter (OTC) forex market. Therapid pace of the currency market made it very difficult to trade onexchange, as most exchanges still traded currencies in the pit – anage-old system requiring multiple interactions to place a single trade.In addition, there were only a handful of currency markets available totrade, with inconsistent pricing and trading volumes. The pricingspreads fluctuated to widen significantly during times of increasedmarket volatility, and market liquidity was not sufficient forovernight trading.Meanwhile, Internet technologies were making rapid advances, and smallupstarts recognized that these new technologies could solve the servicedelays and other problems faced when trading currencies with exchanges.These entrepreneurs became forex dealers who saw the Internet as anideal avenue to provide customers with what they needed – instant andefficient access to the rapidly moving currency markets.Creating and sustaining American jobsThe global forex industry has boosted the national economy by trainingand employing a domestic workforce of thousands. In a globalmarketplace where Americans struggle to compete for high-tech jobs,American forex dealers lead the world in this fast-growing industry,outpacing other firms based in Europe, Japan and Australia. TheAmerican firms are regarded as the leaders in the industry, hiringhighly-coveted, knowledge-based workers who contribute to the economy’sbottom line.Since 2001, FXDC members have added an estimated 1,500 employees totheir companies in the United States alone. The size of the industry inthe United States is estimated to be more than $8.7 trillion.[3]Forex dealers have built workplace environments and cultures that rival– or even outshine – many traditional big name companies. Many of thejobs are high-end service jobs that rely on knowledge-based employeestrained on complex financial transactions and skills that allow U.S.companies to compete and lead in the global financial arena.Forex dealers primarily rely on customers outside of the United States,with upward of 70 percent of all customers coming from more than 140countries. International customers must go through a stringentaccount-opening process, which includes depositing money in U.S. banks.These international deposits mean that tens of millions of dollars areflowing to the U.S. banking industry each day. In fact, it is estimatedthat the banks of forex dealers held $1.3 billion n customer depositsin 2007 alone.Government and self-regulationFor many years, the foreign exchange industry was unregulated in theUnited States. Regulation was long overdue, especially in light of thefact that foreign exchange trading had been regulated in such localesas Hong Kong and London for over a decade. Some rules were formally putin place when the President signed and Congress passed the CommoditiesFutures Modernization Act[4] in December of 2000, which regulated theretail foreign exchange industry for the first time.In the U.S., forex firms [5]are members of the CFTC [6]and theself-regulating National Futures Association (NFA) [[7]], operatingunder the same guidelines set forth for FCMs in the futures brokeragebusiness. As part of a global financial community, leading forexdealing firms [8][9][10][11]are also regulated in multiple countrieswithin five continents. Each firm welcomes regulation and adheres tostrict global and local guidelines and net capital requirements toensure that all business operations meet necessary rules andregulations. Other developed countries have effectively regulated theOTC foreign exchange market, and each member believes that the U.S. cando this as well.On a regular basis, all forex dealers submit financial reports to itsregulators and are subject to lengthy regulatory audits coveringeverything from marketing practices to employee training regimens. Inaddition, many of these long-established regulatory bodies extendspecific regulations solely to retail forex dealers[12], such as highercapital requirements[13], disclosure statements and the requirementthat all dealers disclose to customers that their funds may not be safein the event of bankruptcy.Posted by helloSubscribe to: Posts (Atom)Forex DealersWhat is a forex dealer?A forex dealer provides online trading services to allow individuals tospeculate on rapidly changing foreign exchange rates. Forex DealerMembers (FDMs) are regulated by the CFTC and National FuturesAssociation in the United States, as well as by national and localregulatory bodies where they conduct business, and are held tostringent business and ethical standards.How does forex trading work?Many U.S. and international companies provide online trading softwareand services for individuals (traders) who want to speculate on theexchange rate differences between two currencies. In doing so, thesespeculators buy or sell currencies with the objective of making aprofit when the value of the currencies changes in their favor, whetherthose fluctuations derive from market news, supply and demandprinciples, or geo-political events taking place throughout the world.In addition, the forex market is available to trade 24 hours a day, 5.5days a week, allowing traders more freedom to trade when they want to,not just when an exchange is open.Popularity of forex trading.The growth of trading OTC foreign exchange (known as retail FX orretail forex trading) has more than doubled from 2004 to 2007. Manyfinancial experts suggest this growth curve is projected to continuewell beyond 2010. What has led to this phenomenal growth? Innovation,competition and consumer demand.The public has recognized U.S. forex companies as leaders intechnology, with three of the leading forex firms named to the DeloitteTechnology Fast 500[1], a highly regarded ranking of the top NorthAmerican technology companies, for three consecutive years. The leadingU.S. forex companies have also been named to the Inc. 500 list of thecountry’s fastest growing companies. In 2006, the top FX companies madeup nearly 20 percent of the total number of financial services industryfirms on the Inc. 500 list[2]. It is apparent that Americans haveembraced this growing market, making foreign exchange one of thefastest growing industries in the United States.surance