Daily transactions in the forex market total almost $4 trillion per day. With so much cash concentrated in such a limited arena, price manipulation by the bigger players is a lot less of a difficulty, if it exists at all .
As you can imagine, such high liquidity also implies that it is intensely doubtful a trade in any of the major currency pairs would have difficulty getting matched, even in bad times. This is a big advantage, particularly if you’re trading large positions.
Development
So if forex trading has so many advantages, why is it that it isn’t been favored till recently? The answer is the market itself only began for real in the 1970s when exchange rates stopped being permanently pegged by the ‘gold standard’ and were allowed to fluctuate.
Even then, it was only the banks, hedge funds etc who were involved in trading on the currency market at first. There had been no history of personal investors getting on the telephone to a broker to trade in currency because there was in stocks. This means that it wasn’t until the development of the Net the forex market opened up and currency exchange vs stocks turned into a real choice for retail traders.
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