Investing In Iraq Currency

Posted onDecember 08, 2011 - 9:19 pm by Admin | 0 Comments

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.

E-Trading

Electronic or e-trading has seen substantial growth during the past few years as more and more traders convert to this type of trading. However, growth rates have varied widely from region to region. For example, while participation in e-trading is quite popular in the United States and Europe, Canada lags well behind and while Asia in general has seen dramatic growth, Japan is the exception.

One of the major unknown factors this market faces is whether the retail investor segment will continue to expand given their sophistication level and that of the trading platforms commercially available. Only time and technology will tell.

Three Venues

The spot market is when an investor trades on currency for another, such as US dollars for Euros or British Pounds or Canadian Dollars for Australian Dollars on the "spot." This market is a dealer market and tends to be favorite venue of retail investors.


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