Bank Forex trading could disappear depending upon how regulators apply the new laws being passed by congress to regulate the United States financial industry. The big banks such as Morgan Stanley, Goldman Sachs, Citigroup, and J.P. Morgan Chase all profit handsomely from Forex trading. These profits could go away with the new law. Commentators have said that bank Forex trading could just move offshore but current legal opinion is that the new regulations would apply to banks and their foreign subsidiaries. The rules could even extend to foreign banks that do business in the United States. For the Forex trader the question is if cessation of bank Forex trading will substantially reduce trading volume and liquidity. Will price spreads increase? Will the absence of big traders skew the Forex market itself? Although the downward direction of the Euro or a rising dollar and lower commodity prices will still drive Forex exchange rates the Forex market may not respond as fluidly with less volume and liquidity.

The fact is that because companies and nations need to trade currencies the Forex market will continue and, in all likelihood, any loss in United States bank Forex trading will be picked up by traders and institutions outside of the United States. This could have an effect on Forex trading by itself. If the profits made in United States bank Forex trading go elsewhere it could also have a small but measurable effect on balance of trade and the value of the dollar versus other currencies. From a strictly economic viewpoint the loss of profits in the United States while it attempts to climb out the recession could, in theory, slow the process and harm the value of the dollar. The counter argument is that by cleaning house in the United States financial establishments the next market crash and recession will be delayer or averted. A stable banking system will probably do more to help the dollar over time. As usual understanding the Forex markets can be both complicated and obvious and traders are already taking the prospect of no United States bank Forex trading into account in their trades.

No matter what the effects on the average currency trader the fact is clear that a new world is in store for the large United States financial institutions that congress is blaming for the stock market crash and the recession. Good Forex advice may well be to watch the situation carefully in order to profit from any changes in trading that occur as a result of the coming regulations. It is possible that the accuracy of trading software predictions may suffer slightly if trading volume is significantly less that normal for the Forex markets but in the end Forex double bottoms and Forex double tops will signal market reversals. Nevertheless, the same trading signals will still work and those who learn market fundamentals and do their homework will prosper in Forex trading whether the banks are trading Forex or not.

More Resources

• Forex Trading: Euro-Zone Bank Stress Test Results Expected Today | Daily Markets
• WORLD FOREX: Euro Steady Amid Bank Test Suspicions – Wall Street Journal
• Forex Malaysia Bank Negara – Advantages of Forex | Forex Stock Market
• WORLD FOREX: Euro Steady Amid Bank Test Suspicions – Wall Street Journal | Forex Spot Online
• India Commodity Prices Including Palm Oil – Agriculture | Palm Oil HQ
• Tropical storm fears lift crude prices | Commodity-Trading-Basics.com
• Commodity prices continue to rise in June | Opalesque Commodities Briefing
• The territorial rating controversy in auto insurance: A economic viewpoint | Auto Insurance Quotes Plan
• Sourcing Viewpoint: Window of Opportunity in the Financial Crisis | Economic Articles
• Austrian Economics and Private Banking « Bank For Life