There is no centralized location of Forex
- major trading centers are located in New York, Tokyo, London, Hong Kong,
Singapore, Paris, and Frankfurt, and all trading is by telephone or over the
Internet. Businesses use the market to buy and sell products in other countries,
but most of the activity on the Forex
is from currency traders who use it to generate profits from small movements in
the market.
Even though there are many huge players in
Forex, it is accessible to the small investor thanks to recent changes
in the regulations. Previously, there was a minimum transaction size and traders
were required to meet strict financial requirements. With the advent of Internet
trading, regulations have been changed to allow large interbank units to be
broken down into smaller lots.
Each lot is worth about $100,000 and is accessible to the individual investor
through 'leverage' - loans extended for trading. Typically, lots can be
controlled with a leverage of 100:1 meaning that US$1,000 will allow you to
control a $100,000 currency exchange.
