What is the Forex market?(Basic Concepts)
What
is the Forex market?(Basic Concepts)
Basically,
the Forex
market is where banks, businesses,
governments, investors and traders come to exchange and speculate on
currencies. The Forex market is also referred to as the ‘Fx market’, ‘Currency
market’, ‘Foreign exchange currency market’ or ‘Foreign currency market’, and
it is the largest and most liquid market in the world with an average daily
turnover of $3.98 trillion.
The Fx market is open 24 hours a day, 5 days a week with the most important world trading centers being located in London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris, and Sydney.
It
should be noted that there is no central marketplace for the Forex Market;
trading is instead said to be conducted ‘over the counter’; it’s not like
stocks where there is a central marketplace with all orders processed like the
NYSE. Forex is a product quoted by all the major banks, and not all banks will
have the exact same price. Now, the broker platforms take all theses feeds from
the different banks and the quotes we see from our broker are an approximate
average of them. It’s the broker who is effectively transacting the trade and
taking the other side of it…they ‘make the market’ for you. When you buy a
currency pair…your broker is selling it to you, not ‘another trader’.
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