The currency market has existed in Spain since 1959, but it wasn�t really until the year 1992, when exchange control was lifted, that Spanish investors began to open up their portfolios to stock markets all over the world.

Since then, the international money markets handle a daily dance of more than two billion dollars, a dance which moves to the rhythm of the different currency exchange rates. And the strangest thing about it all is that a good deal of these comings and goings of money have nothing to do with any trade, but are merely speculative gambles.

As a move against speculative behaviour, some economic theorists, like the Nobel Prize winner James Tobin, have come up with the idea of levying a tax on international transactions to put speculators off. If such a tax were to make the leap from economic theory to reality, the international community would obtain between 150,000 and 250,000 million dollars which could be used to eradicate hunger and other tragedies which beset the Third World.

The new technologies provide money with a space of absolute liberty to circulate at the speed of byte. The markets do not require passports and never sleep: when the European stock markets close their doors, the New York and Chicago markets start their sessions, before Oceania takes over and then Japan. And then it�s time for Europe to wake up again. Some markets overlap with others so the trading never stops. The speed, security, sophistication and liquidity of these markets is to a large extent due to the high degree of trust there is between traders. As in other things in life, success or failure is a question of timing: making investments at the precise moment when currencies are rising or falling.

Every second of the day the currency markets handle thousands of transactions in which instruments are negotiated in different currencies, and where attention has to be paid to the relative prices of the currencies in which the instruments are issued. These are decentralised markets, open to the investment community, in which currencies are traded on the spot market or on forward markets, as well as more sophisticated options, such as currency swaps or eurobonds.

You don't need to be an expert to dabble in the great currency superstore. Some people will tell you that the private investor can often beat the experts, but there is no doubt that a knowledge of the market is essential to avoid risk. The questions that financial analysts ask people interested in speculating with currencies are concise and direct. The first thing they need to know is approximately how much the investor is willing to lose. In accordance with this figure, appropriate forward contracts are made and a complex system moves into action around them. The simplest operation consists of opening a current currency account and wait for the currencies to go up before selling them. As easy as that.

In the currency market it is a good idea to be familiar with some instruments which provide a little stability to the money game, for example, a forward contract, which allows investors to play with little money and high profit. This product guarantees the sell price of a currency at a future date. When the contract matures the call price will be the one fixed by the forward contract, regardless of the actual value of the currency on that day. It is the difference between these two figures that determines whether the operation has been a success or a failure.

Foreign exchange rate options is another interesting possibility. By paying a premium (the sum a buyer has to pay to acquire the option), the option holder can exercise their right to trade the currency if and when the conditions are favourable. Another way to play the market is to set up currency investment deposits or funds; financing in foreign currency; or trading in currency futures, either to speculate or to avoid risk.

In very broad terms, there are four types of investor who play the currency market:
� The first are tourists who travel from one country to another (not within the Eurozone, of course), who pay in a different currency, either with banknotes, travellers cheques, credit cards or other payment systems. The only skill required is to realise that the local currency tends to undergo slight variations in its daily exchange rate. The traveller's purchases will be more or less expensive depending on the strength or weakness of the currency they receive their income in.
� The same problem, but on a much greater scale, affects another two major agents who transact with currencies: corporations and states. Both go abroad to buy and sell, under more or less the same rules as private individuals.
� A fourth player is the one who really moves the currency market. Represented by financial institutions and investment brokers, this trader goes to a virtual trading floor -resident in hundreds of thousands of PCs- with the aim of winning money with the ups and downs of the value of currencies. There are no goods involved, only a game of forecast and expectations in which some celebrate and others lament. Risk forms an essential part of the great daily bazaar at which investors buy and sell.