Presently, there are different types of financial markets such as futures market, foreign exchange market, option market, gold market, stock market and interest market. Foreign exchange market is the good place for trading foreign exchange currency. It is also the best place for the transaction of all foreign currency. People pay one type of currency when doing trading business, however when earns another type of currency receive the commodity. It means that when they are setting account, business people pay and receive various currencies.

Hence, they should convert currencies, which they received into the currencies, which they can purchase commodities. With this same, when purchasing a foreign currency, a company should make use of the concerned currency of a country to make payment; hence it requires converting the domestic currency. Exchange rate of currencies can fluctuate according to the demand as well as supply between two currencies. Forex traders purchase one type of currency in an exchange rate, however up casts this currency in another more beneficial exchange rate, he might obtain. Speculation has occupied the entire Forex market.

Because of the fluctuation between two trading currencies, those companies own foreign asset, when these companies convert the properties into cost country currencies. If the worth of a foreign asset based on foreign currencies remained unchanged, if he exchange rate changes. If converting this property worth according to the domestic currency then there can be gain and loss. The company can eradicate such hidden risk through hedging. It carries a foreign currency trading, loss, its transaction result that is produced by the exchange rate change.

As an worldwide capital speculation market, the history of Forex trading market is much short as compared to stock, gold and interest market. However, it is developing in a surprising speed. Today, the Forex trading market everyday trading volume has amounted to 15o billion United States dollars. Its scale has gone far beyond the stock as well as other finance commodity trading markets; it becomes the worlds’ largest sole finance trading market and the speculation market.

Since the birth of the forex trading market, the fluctuation of the exchange rate of Forex trading market becomes large. In the month of September 1985, 1 United States dollar exchanged 220 Japanese yen; however in the may 1986, 1 United States dollar can exchange 160 Japanese yen in 8 months. Recently, the foreign exchange market wave amplitude has been larger. On September 8, 1992, one pound exchanged 2.0100 United States dollars. On November 10, one pound is exchanged 1.5080 United States dollars. In two months, the pound has exchanged United States Dollar exchange rate to fall almost 5,000 devalued 25%. Presently the fluctuation of the exchange rate of the Forex trading market can enlarge unceasingly. On September 16, 1992 the pond has exchanged United States dollars from 1.8755 to fall into 1.7850