The Online Forex Market Conundrum
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The forex market is surprisingly stable - and yet, there is a growing recognition that the online forex market is a critical factor in
offering speed and administrative efficiency by processing global forex trading orders online. This conundrum is the topic in virtually every
forex trading course.
Let us take a look at how the modern online forex market has evolved since its inception as an inter-bank market in 1971. Back then, global
forex trading involved the exchange of specified amounts of cash in a specific currency unit for a fixed amount of cash in another currency unit.
The exchange rate was specified and was calculated using the classic macro-economic law of supply and demand. The higher the demand (or the lower
the supply), the better the exchange rate.
By the 1980's the number of transactions in the global currency market started growing exponentially due primarily to advances in
international trade and the abolition of foreign exchange currency restrictions in many countries. For example, the daily turnover was $5 Billion
in 1977, then 500 Billion in 1987, to a whopping one Trillion by 1992.
As a student in any forex trading course will know, global forex trading is a 24 hour market. Trades take place amongst banks and other
financial institutions continually. It is primarily for this reason that a need for an online forex market evolved. And as it happens, the period
of growth in global forex trading (as described in the previous paragraph) also saw the advent of powerful and relatively cheap computing power.
Put the need to be available 24 hours a day, seven days a week with affordable computer processing power - and the online forex market was
born!
With this understanding, we can now address the question we raised at the beginning of this article: why have an online forex market when the
reality is that the foreign exchange currency market is generally stable? Some of the best responses can be found in the curriculum of the
leading forex trading courses. For example, Peter Bain's ForexCourse, which supposedly exposes Currency Trading Strategies, highlights that forex
trading is not gambling. In gambling, once a bet is placed, you cannot withdraw from a losing situation. However, with Forex trading, you can set
your exposure level and then as the market is stable over the long term, you limit your loss or simply wait until you are in profit.
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