Transactions in foreign currencies take place when one country\'s currency is purchased (exchanged) with another country's currency. The price agreed upon or negotiated for the currency purchased is referred to as the foreign exchange rate. Major commercial banks in the money market centers throughout the world are responsible for the majority of foreign currencies bought and sold.

Trading volume has been growing at a rate of 25% per year since the mid-1980s and therefore it is not difficult to accept the notion that the currency options is the world's fastest growing industry. What used to require days to accomplish in Europe or Asia now only takes a few minutes. Needless to say, technology has changed everything and millions of Dollars are moved from one currency into another every second of every day by major banks through computers and for the average investor, with the touch of a phone.

There is little that an individual investor can do about currency risk. It can be much too expensive for an individual to hedge against adverse currency moves in derivatives markets. Further, it is about as likely over the long haul that currency translations will help you as hurt you. This kind of "help" happens when the U.S. dollar weakens against other currencies.