London’s Role At The Heart Of The Global Forex Markets Is Under Threat
Foreign exchange , commonly known as ‘Forex’ or ‘FX’, is the exchange of one currency for another at an agreed exchange price on the over-the-counter (OTC) market. The Triennial Survey complements more frequent regional surveys conducted by foreign exchange committees in Australia , Canada , London , New York , Singapore and Tokyo as well as the semiannual survey of OTC derivatives markets coordinated by the BIS.
A Recent research we carried out with the Massachusetts Institute of Technology has shown that copy trading, where traders watch the trading activity of other people and make their decisions accordingly, performs significantly better than manual trading.
As the foreign exchange market became increasingly sophisticated and market participants became better equipped to manage volatility, particularly through hedging, the threshold for what constituted an ‘overshooting’ in the exchange rate became much higher: a moderate misalignment was no longer considered sufficient to justify intervention.
The floating exchange rate has provided a buffer against external shocks – particularly shifts in the terms of trade – allowing the economy to absorb them without generating the large inflationary or deflationary pressures that tended to result under the previous fixed exchange rate regimes.
As traders, we can take advantage of the high leverage and volatility of the Forex market by learning and mastering and effective Forex trading strategy, building an effective trading plan around that strategy, and following it with ice-cold discipline.