A key tactic in the world’s recovery from the financial crisis has been for banks to increase their capital reserves. While a noble goal, the unfortunate consequence is that it has significantly increased the length of time that savers are locked out of their deposits – an increase which is scarcely compensated for by an insignificant rise in interest rates.
Not everyone wants to invest their savings for two years with no right to revoke and no more contributions than three or four percent per annum. These savers are therefore seeking more attractive investment alternatives. There are mutual funds, but these come with additional costs; and of course there is the stock market, but this requires considerable capital to begin trading.
For investors who do not possess large funds but are looking for a significant return on their capital, the foreign exchange market is a natural home. Forex is the fastest growing and most liquid market in the world: the Bank for International Settlements’ (BIS) triennial report found that in 2010 global foreign exchange trading reached $4trn a day, up 20 percent from 2007.
Its huge scale is due to its character – rather than there being a specific place of trading for over-the-counter products, the foreign exchange market is a vast network of central and commercial banks, investment companies, brokers and dealing companies, regional currency stocks and individuals, all trading with each other online, 24 hours a day.
The main goal for investors entering the forex market is to diversify their assets and withdraw funds from the home market in periods of high uncertainty. And although the market’s rate of growth has slowed (between 2004 and 2007 it grew 69 percent), improving internet infrastructure in developing countries and investment globalisation suggests it is unlikely to peak anytime soon.
According to the latest BIS data, the euro-dollar is still the most traded currency pair of the market, accounting for roughly 28 percent of all transactions per day (more than $1trn). In second place is the dollar-yen pair (14 percent of daily turnover, or $560bn). The pound-dollar pair takes the third position (nine percent of market share, or $360bn). The euro-yen and euro-pound pairs commonly hit three percent ($120bn) of daily turnover in the forex market.
The US dollar is the market’s dominant currency, taking part in 84.9 percent of transactions – although this has decreased from 85.6 percent in 2004. The use of the euro, by contrast, has increased from 37 to 39.1 percent. Approximately 35.9 percent of currencies traded are from the Asia-Pacific region, including the Japanese yen, Korean won, and the Hong Kong and Singapore dollars – in 2007 their share was 33 percent. In recent years the Australian dollar surpassed the Swiss franc to become the fifth most traded currency in the world.
Trading on the foreign exchange market is also attractive because brokers provide the client with leverage for their trades, which can exceed the deposit hundreds of times. This means that successful trades can result in a profit many times larger than the initial deposit. For example George Soros, one of the most famous currency speculators in the world, earned $1bn selling the pound for just two weeks.
Access to the forex market simply means registering with any brokerage company – the challenge is finding the right one.
The market is flush with companies offering essentially identical services. However there are still some leading companies that stand ahead of the competition because of their dependability, attitude towards clients and good service.
FBS is one such company. Formed in early 2009, it now boasts 80,000 clients across more than 50 countries. It operates offices in 16 countries in Europe and Asia, including its main offices in Kuala Lumpur, Shanghai and St. Petersburg.
The broker provides three kinds of account to cater to a variety of traders. First, primarily for beginners, is the micro account, which offers fixed spreads and can be opened with deposits as low as $5. Standard accounts can be opened with $25 and offer ECN/STP trading with leverage up to 1:500.
For more experienced traders with more substantial deposits, FBS provides an Unlimited account, offering interbank liquidity, floating spreads, the ability to see the depth of the market, and no limits on trading strategies and electronic advisers.
Prospective clients can experiment with FBS’s platform by creating a demo account, and enjoy a $5 bonus when opening a live account. With this bonus traders can evaluate the advantages of trading with FBS without depositing their own funds.
Regardless of their type of account or the size of their deposit, every client is equally valuable to FBS. The broker’s competent and professional staff are always ready to help traders and respond to questions as fast as possible.
Informational and analytical support for clients is one of the major advantages of FBS. In order for traders to feel more confident making decisions about committing a transaction, FBS has a large Research Department populated by experts in the global financial markets. Every day these analysts prepare reviews, articles, comments and news on the situation in the European, Asian and American stock exchanges.
The quality and reliability of FBS has been noted by a number of independent institutions of the international currency market; in 2010 FBS received the ShowFx world exhibition awarded for Best Mini-Forex Broker.
With high liquidity, the strong potential for even further growth and an endlessly dynamic nature, the international currency market is one of the most popular investment alternatives today. Although trading comes with certain risks, it also carries the potential for very quick, very high reward – which can be many times greater than the initial investment.