Thursday, June 12, 2014

Forex trading in 2020

Forex Trading as we all know , is a global decentralized market for the trading of currencies. The main participants in this market are the larger international banks. Financial centers around the world function as anchors of trading between a wide range of multiple types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies (wikipedia) 

The foreign exchange market works through financial institutions, and it operates on several levels. Behind the scenes banks turn to a smaller number of financial firms known as “dealers,” who are actively involved in large quantities of foreign exchange trading. Most foreign exchange dealers are banks, so this behind-the-scenes market is sometimes called the “interbank market”, although a few insurance companies and other kinds of financial firms are involved. Trades between foreign exchange dealers can be very large, involving hundreds of millions of dollars.[citation needed]Because of the sovereignty issue when involving two currencies, Forex has little (if any) supervisory entity regulating its actions. 

With the above definition of the Forex ( Foreign Exchange) Trading we will be dealing with Exchange of Currencies and more in particular banks are the movers behind these exchanges. In dealing with the topic of " Forex trading in 2020" we had to know the present status of Foreign Exchanges at the present time 2014  and project what would be the scenario of the " forex trading in 2020"

Projecting Forex Exchanges in 2020 is a work of economist , banking expert or we should say foreign exchange experts. But since somebody had asked me to answer this topic i would say my opinion or i will be one in the opinion of some experts. 

     Let us know what experts are saying ;

         From Bloomberg ;  is a premier site for business and financial market news. It delivers world   economic news, stock futures, stock quotes, & personal finance advice.
            
            Foreign-exchange trading will more than double to $10 trillion a day on average a decade from now, driven by portfolio diversification from central banks, pension funds, hedge funds and insurance companies, according to UBS AG. The Bank for International Settlements said in September that currency market volume rose to $4 trillion a day. The immense growth of currency markets is likely to draw in investors seeking liquidity to manage large-scale portfolios,” wrote Mohi-uddin in a research report today. “It also means central banks wishing to influence exchange rate levels through intervention will need to act more forcefully to have any sustained impact.”  UBS estimated that the daily turnover in currency markets related to hedge funds, pension funds, mutual funds, insurance companies and central banks rose 42 percent to $1.9 trillion in 2010 from $1.3 trillion in 2007.  The bank said these investors are likely over the next 10 years to be “more active in managing their portfolios of domestic and foreign assets as currency markets are likely to be super-volatile.”

         From Bitcoin Early Adopters ;

             (NOTE)  Bitcoin is a new technology which had started in 2009.  Since its start it had been used as a digital currency which is now disrupting the whole financial system.  Since it is being used as a digital currency or cash on the internet it can be send to any body in the world from a small fraction of bitcoin to a more bigger amount thru a small cellphone or computer. Using bitcoin as a digital currency takes over a new kind of "Foreign Exchange" which is peer to peer, decentralized without government control with lesser fees. The Exchange from bitcoin to a local currency takes place at the countrys recipient. If all the countries of the world adopt a new form or system of exchange will take place."

             The co-founder of Coinbase, who came from the insider club of Goldman Sachs, admitted 90% of bitcoin is investors hoarding coin, and only 10% represents the actual transactions taking place. Yes, that does seem scary, but keep in mind, we are in Phase 2 of Bitcoin. The first phase was dominated by college kids interested in cypherpunk. The second phase is people on the verge of retirement hedging their bets by placing a small amount of their portfolio into bitcoin because they notice it has real potential. I am part of Phase 2. Phase three will be the acceptance of Bitcoin by the banking industry and integration into the system.

           With those opinions above , i do believe that bitcoin will be side by side with the present foreign exchange trading system but eventually bitcoin will have the lead and would take over the present system.  The benefits of the bitcoin digital currency cannot be compared with the present . Bitcoin is peer to peer digital currency , its decentralized, no government control and non inflationary.  The disruption is now taking place from the year 2009 and on going what more of the coming 2020.