Decentralized market

One of the key reasons for which forex is such a vast and flexible market is its decentralized structure. The market is not controlled by a single country or institution. This is one reason why during the financial crisis forex traders remained safe.

For example, because of the sub prime crisis in US, thousands of Americans involved in different businesses were affected since their sales dropped significantly as money was sucked out of the economy. This directly affected the stock market.

But forex is a global market, and international trade always occurs. Speculative activity is only part of forex trading. This means that the forex market continued as usual. The freedom from government regulation and interference means that governments are unable to force trading halts or stop short selling (which is the case for a number of stock markets).

This doesn’t mean that forex is not influenced by rumors, news or sudden turns in international politics. Indeed it is, and prices can be extremely volatile but the market itself remains intact.

Conclusion

Forex market is a haven of security in the middle of the financial storm. Whilst forex prices can be volatile, the market itself has characteristics that make it secure and stable.

With its massive liquidity, global reach, decentralized structure, transparent pricing and freedom from government interference, forex offers a great opportunity for traders even in the worst financial crisis.

Pages: 1 2

Tags: financial crisis, forex trading

This entry was posted on Friday, January 2nd, 2009 at 3:04 pm and is filed under Why Forex?. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.