Forex means Foreign Exchange Market. Foreign Exchange Market is where foreign currencies are bought or sold, and we trade currency pairs. Here, buyers and sellers are involved in the sale or purchase of currencies from different countries. Forex market is the world’s biggest, most liquid market with an average daily trading volume exceeding $5 trillion.
Two types of a market in Forex
Spot Market: Spot Market is a public financial market where financial currencies and commodity stocks are traded for immediate delivery. Delivery means that money exchange is a very spot transaction in this financial market. Very shortly, the spot market form of the investment period will be two or three days.
Forward Market: Forward competition is a prospective investment in the market. This market is strategically dependent and standardized forward contracts are called futures contracts and traded on a futures exchange. The time set for future market investment is less than 90 days.
The Forex market is open from Monday morning to Friday evening. The Forex market is always open during the week.
You can “buy and sell” and thus bet on rising or falling prices. This is special and allows Forex traders to make cash when exchange rates go up and down.
The Forex market includes many specific types of participants, the most significant positive being:
1. Central Banks and Commercial Bank
2. Companies of international trade
3. Forex brokers
4. Large, medium and small institutional investors (i.e. investment enterprises, fund managers, etc.)
5. Common retailers
6. World Travellers
The actual buyers and sellers of foreign currencies- exporters, importers, tourists, investors, and world travelers. They are actual users of the currencies and approach Commercials banks to buy it.
Commercial banks are the second most important body of the foreign exchange market. The banks dealing in foreign exchange play a position of “market makers” in how they quote the foreign exchange rates for purchasing and selling foreign currencies regularly. They also operate as stock exchanges, helping to sweep out the gap between demand and currency supply. These banks purchase the currencies from the brokers and sell them to the customers.
Foreign exchange brokers act as a contact between the central bank and commercial banks, and between the real customers and business banks. They are the main source of market data. These are the people who do not buy the foreign currency on their own, but on a commission basis strike a deal between the buyer and the seller.
Any country’s central bank is the body in the exchange market organization. Central bank work as the last resort lender and the country’s foreign exchange bank manager. The central bank has the authority to regulate and control the foreign exchange industry to ensure that it operates in an orderly manner. One of the central bank’s significant tasks is to avoid if needed by direct involvement, the aggressive fluctuations in the foreign exchange market.
Where is Forex located?
Forex works as a non-centralized network. It works almost the same way as the internet does (Worldwide Web). That means it executes every order from any trader in a global network of demand and supply, called the ECN network (Electronic Network of Banks). That fact adds reliability and transparency into Forex trading transactions but it adds liquidity and that means low cost of transactions.
What are the Advantages of Forex Trading?
Forex Trading offers some unique advantages:
1) Enormous liquidity that is converted into minimal transaction costs (price is measured by the spread that is the distinction between buyers and sellers)
2) Huge Leverage ( Leverage means trading with more funds than you hold in your account, common leverage in Forex Trading is 100:1)
3) Wide Choice of everything (Hundreds of brokers to choose, hundreds of strategies, manual and automated systems, signal providers, you name it!)
4) Trading 24 hours per day (24/5) and access via desktop and mobile devices
5) Fantastic its Promotions are available (50-100% welcome bonus or even No-Deposit bonus up to $100)
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