The foreign exchange market (also called FX or forex) is the financial home of currency trades. Participants in the foreign exchange market invest in money, betting that the value of one currency will rise or fall relative to another. As with commodities markets, investors in the foreign exchange market have the option of putting money into futures contracts, which are contracts based on the future value of a given currency. Investment in foreign exchange markets is popular among banks, hedge funds, retail brokers, investment firms, and other players with large amounts of capital.
The market structure that exists today evolved as the world’s nations left the gold standard following expensive 20th-century wars. In 1976, the International Monetary Fund finalized the move away from gold and initiated the system we have today, in which the value of currencies are determined relative to one another.
About Rao Chalasani: During the late 1990s, Rao Chalasani provided support and implementation for foreign exchange training at a bank in New York, NY. Since then, Chalasani has held positions at Merrill Lynch, Bank of America (BOFA), and Deutschebank. He lives in New Jersey.