Trading locations are scattered all around the world, rather than being centered in just a few major cities of the USA or Europe.
Of course, as with any major market, many factors can influence foreign exchange rates, which may account for the powerful attraction for many Forex traders - the excitement. Average daily turnover in the foreign exchange market stands around 2 to 3 trillion dollars. That's DAILY turnover, and the figures come from none other than the Triennial Central Bank Survey of the BIS (Bank for International Settlements).
And the trend is upward. In other words, more money gets traded with each passing year, and may surpass $3 trillion within a very few years.
Perhaps most amazing, however, is the fact that anyone can enter this market and begin to trade foreign currencies. Entry requirements are low. This has been both a positive (because initial deposits are minimal) and a negative (a lack of experience can bring losses very quickly).
Now however, Forex trading can be partly automated by software that is sophisticated enough to offset much of a beginner's lack of knowledge. Even better, this software is not at all expensive - not when compared with the profits it may bring.
The concept of automation marks an important new trend in the foreign exchange trading market. The Interbank spot Forex market has also considered automating as well.
Automation actually brings a number of important benefits to Forex traders - especially those just entering the market.
With your computer handling much of the trading process for you, transactions can be done in real time. Although manual systems are well established, they have never offered the speed that an automated Forex trading system does. All trades are initiated and completed within milliseconds, which can be a huge plus because they virtually eliminate any lag time.
Problems that characterized manual trading methods can now be addressed and eliminated, or at least minimized. For example, if a trader were hit by a few losses in a row, he could be wiped out and unable to make new trades. This problem can easily be addressed using an automatic trading system.
Automated Forex trading also permits greater diversification. In the past, if you wanted to trade more currency pairs simultaneously, or a wider variety of them, you were limited by your memory and concentration. But thanks to automated trading, you can execute trades with other traders in Singapore or London or wherever, even it's midnight where you are. Thus you have the option of doing multiple exchanges.
You can also quickly evaluate various trading models from short-term data, projecting trends for as short as 15-minute or half-hour time slices.
As mentioned, extreme liquidity makes the Forex market unique. And greater automation will only increase this liquidity, with funds flowing faster than ever.
Risk becomes easier to manage with automation. International checks, now commonly used in Forex market purchases, are synchronized via automation technology. Since automated transactions are handled in real time, there is little chance of delayed payments, reducing the risk of non-payment by either party. And although issues still exist with the use of automated systems, they can easily be addressed and resolved through consistently updating the technology.
With the spread of automated Forex trading, the $3 trillion daily turnover may soon be far surpassed. And given the fast, efficient trades between any and every time zone, Forex trading is certain to remain one of the most profitable business models in today's changing world.
