Since then, the market has continued to grow. The market grows whenever one currency is traded for another and such trading is facilitated by the various participants in the currency trading game. In the currency trading game, the players are not on the same playing field. On the contrary, the foreign exchange market follows a hierarchy in terms of level of access. The level of access is determined by the amount of money each player is trading.According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008. Of the $3.98 trillion daily global turnover, trading in London accounted for around $1.36 trillion, or 34.1% of the total, making London by far the global center for foreign exchange. In second and third places respectively, trading in New York accounted for 16.6%, and Tokyo accounted for 6.0%.

In addition to "traditional" turnover, $2.1 trillion was traded in derivatives. Exchange-traded FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts. Several other developed countries also permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts.

At the top of the hierarchy is the inter-bank market which accounts for almost 53% of the total foreign exchange transactions. The largest investment banking firms constitute the inter-bank market. Most of the trading is done for the bank’s account though some are done on behalf of customers. In the inter-bank market, the difference between the bid and ask prices or spreads, is small if not nonexistent. Investment banking firms are in the position to guarantee numerous transactions for large amounts, hence they can ask for smaller spreads. The advantage of being in the inter-bank market is that players within this level know the spread of other players—information which is unavailable to those with lower levels of access.

Smaller investment banks also belong to the inter-bank market but their spreads are often wider. Indeed, as one goes down the hierarchy, the spread widens. Commercial and Multinational companies are another level in the hierarchy. The financial activity of these companies involves foreign exchange for goods and services. While the trading need is not as demanding as those of banks, commercial and multi-national companies still play an important role in the currency trading market and contribute significantly to the total cash value traded daily.

Central Banks maybe of less significance compared to commercial and multi-national companies, however, central banks are still important players in the trading game. National central banks control the money supply, inflation and interest rates of their country. There are speculations that central banks often buy when the exchange rate is too low and sell when the exchange rate is too high in order to stabilize the currency of their country. This speculation however, is not supported by any evidence.

It should be clear by now how the demand for currency trading affects the level of access of each player. As one goes lower in the hierarchy, the need for a player to trade currency is lower hence they do not take the risk of guaranteeing large numbers of transactions for large amounts. For example, investment management firms manage large accounts on behalf of their customers. They use foreign exchange only when they need to make transactions in foreign securities.

Retail forex brokers facilitate currency trading at a smaller level. In the retail forex market, there are two separate trading desks. The first one trades foreign exchange while the other one is used for off-exchange trading for retail customers. Most clearing banks are not willing to process small orders therefore customers do not have direct access to the inter-bank forex market. The retail forex brokers then act as facilitators for these small-order customers.

Caveat

Many people have found how simple it is to earn through currency trading. Even a dollar capital can snowball into thousands of dollars if you know when to buy and when to sell. Etched in stone, all currency traders have but one motto: buy low and sell high. A jobless fresh graduate took a risk by buying Euros. He held on to the currency until it gained value and, as soon as he realized the value might lessen, he sold the currency for another. A forex (or foreign exchange) scam is any trading scheme used to defraud traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market. Currency trading "has become the fraud du jour" as of early 2008, according to Michael Dunn of the U.S. Commodity Futures Trading Commission. But "the market has long been plagued by swindlers preying on the gullible," according to the New York Times. "The average individual foreign-exchange-trading victim loses about $15,000, according to CFTC records" according to The Wall Street Journal. The North American Securities Administrators Association says that "off-exchange forex trading by retail investors is at best extremely risky, and at worst, outright fraud." "In a typical case, investors may be promised tens of thousands of dollars in profits in just a few weeks or months, with an initial investment of only $5,000. Often, the investor’s money is never actually placed in the market through a legitimate dealer, but simply diverted – stolen – for the personal benefit of the con artists."

In August, 2008 the CFTC set up a special task force to deal with growing foreign exchange fraud.” The forex market is a zero-sum game, meaning that whatever one trader gains, another loses, except that brokerage commissions and other transaction costs are subtracted from the results of all traders, technically making forex a "negative-sum" game. These scams might include churning of customer accounts for the purpose of generating commissions, selling software that is supposed to guide the customer to large profits, improperly managed "managed accounts", false advertising, Ponzi schemes and outright fraud. It also refers to any retail forex broker who indicates that trading foreign exchange is a low risk, high profit investment. The U.S. Commodity Futures Trading Commission (CFTC), which loosely regulates the foreign exchange market in the United States, has noted an increase in the amount of unscrupulous activity in the non-bank foreign exchange industry.  An official of the National Futures Association was quoted as saying, "Retail forex trading has increased dramatically over the past few years. Unfortunately, the amount of forex fraud has also increased dramatically." Between 2001 and 2006 the U.S. Commodity Futures Trading Commission has prosecuted more than 80 cases involving the defrauding of more than 23,000 customers who lost $350 million. From 2001 to 2007, about 26,000 people lost $460 million in forex frauds. CNN quoted Godfried De Vidts, President of the Financial Markets Association, a European body, as saying, "Banks have a duty to protect their customers and they should make sure customers understand what they are doing. Now if people go online, on non-bank portals, how is this control being done?"

In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system. To consider trading in the Forex market is more beneficial than other financial markets. There is superior liquidity with its market, it runs 24 hours daily, and it is well known for better execution overall. Traders see the Forex market as the most considerable opportunity because of the given benefits.

However, it shouldn’t be misconstrued that making money through Forex trading is easy. After all, when you enter with big risks; dealing with them is altogether another story. One should always remember that the mind is always more important than the tools. Forex brokers confessed that 90% of the traders in reality end up with less money than they started. Furthermore, 5% of them end up with an even break and only the remaining 5% profit consistently. Successful trading takes skill and perseverance. Some make it to the sweet highest top and some, crash and burn, to a painful economic slope. Traders do need to think differently to be able to reach the top. The simultaneous buying and selling of one currency for another root from two simple reasons: one is for the 5% daily revenue from companies and governments, who provide products and services directly for a foreign country. This raises the need to convert their profits into their own local currency. Another reason is simply trading for profit, mostly for speculation. There are commonly known currencies that traders refer to as “the majors.”

These currencies are known to be the best ones to put their money on because of their liquidity. The majors today are: US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. There are special indicators that filter the top traders from the rest. These top traders share common descriptions starting with how in the know they actually are, speaking of the knowledge needed in the market. These traders know every single important concept in trading. The best of the best know that every day in the market offers new learnings. They always approach the market respectfully and unassumingly, so as not to be proven wrong. They are always ready for anything. These experts have a delicate Forex trading system. They are very meticulous and disciplined in following this system thoroughly. These people know that there is actually a greater rate for success if the trades are signaled according to their system. They also include and consider the price behavior into this system. Money management is one of the most important issues in trading.

These top traders know how to keep away from taking the risk of ruin. Of course, one cannot succeed without funds in their trading accounts. Money management gives them the edge to call the shots when needed. These people are also sensitive to psychological aspects that may affect the decisions made by other traders. They take these issues with serious consideration. It shows significant results once a trader accepts that every single trade has two possibilities, not just gaining. These are the actual dynamics signifying as well as controlling the success rate of Forex Traders. It is more than just a possibility for a good trader to make money in the Forex Market. Trading is a delicate process, it takes time for one person to master it and be on top of his game. You just have to know how to speed up the process keeping in mind the above mentioned indicators.