Forex refers to the market in which currencies are traded. The forex market is the largest, most liquid market in the world with an average traded value that exceeds $1.9 trillion per day and includes all of the currencies in the world. The market is open 24 hours a day and currencies are traded worldwide. When forex trading first started popping up, the markets were very risky. It was new and so the rules and regulations were a bit confusing and a bit slim. The high volatility of the currency markets was, and for the most part still is, a factor that most investors have trouble stomaching. The internet is flooded with trading systems promising to make you rich. Everyone claims to be an expert. However, as more and more reputable sources are touting the successes of forex trading, the market is slowly growing.
Retail foreign exchange broker FXCM (FXCM) recently acquired a 50% controlling stake in boutique computer-model driven trading firm Lucid Markets Trading Limited for $176 million. This deal serves to underscore the clout of new, often high-speed trading firms. U.K. Based Lucid Markets has seen a stellar rise in its status in the traditionally banks-dominated field of price-making. The company has had only four days of losses since its inception in 2009, the biggest one-day loss being less than $70,000. This is the largest acquisition that FXCM has undertaken. FXCM traditionally serves individual market traders, but in recent years has made a push into the institutional space. This deal will extend its capabilities into the institutional currency markets. In addition, FXCM will have the right to purchase the remainder of the business within the next four years. This will give FXCM in expanding its business past individual traders.
E*Trade Financial Corporation (ETFC) is a popular online brokerage for the individual investor. In recent years they have partnered with FXCM to bring forex trading services to their wide clientele. Ameritrade (AMTD) offers forex services for its clients through its own proprietary forex trading platform. Interactive Brokers (BKR), similar to Ameritrade, also offers its investors forex trading services through its own proprietary platform. However, while E*Trade and Ameritrade target the everyday investor, Interactive Brokers caters to the more high net worth clientele. Interactive Brokers also offers its services to institutional investors. However, if you are looking for a solid forex experience, this is FXCM's area of expertise.
As more and more people are facing their fears in the forex markets, those companies that cater to the needs of foreign currency exchange investors will see their companies grow. This is a global market with endless opportunity for growth. FXCM is perhaps one of the largest forex brokers. They are certainly one of the most reputable and well-respected. This company, especially with its new acquisition, would make a great addition to any long-term portfolio. And without the risk and volatility of actually investing in forex markets.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.