The foreign exchange market or the forex market is the most familiar name among traders who trade in the financial market. It is not only a familiar name, but also a dream for every trader to trade in this market. It does not matter whether you are an experienced currency trader or a newbie, trading forex is golden chance for you to earn money. If you think you are among those who want to be a part of the huge foreign exchange market, you need to have some important information about the market.
Below is a detailed discussion about this market (Information Courtesy - CornerTrader).
- Names:
The foreign exchange market is also known as the forex market or the FX market. These are familiar names of the market.
- Volatility:
This market is extremely volatile and unbelievably liquid. More than 5 trillion dollars is traded daily in this market. Because of the liquidity, this market is considered to be the largest and most liquid financial market in the world. This is the largest part of the money market. Its volatility and complexity is the reason that it is impossible for a single entity even the central banks to control this liquid market.
- Open for all:
Since the FX market is an over the counter (OTC) market, one can trade from anywhere in the world. It does not matter where you are, you can also trade from a remote area. You just need a computer and a fast internet connection.
- Purpose:
The primary purpose of the foreign exchange market is assisting the international trade and the forex investment. With the help of this trading the investors or traders can exchange or trade their currency with other currencies.
- OTC market:
As this market is an OTC market, it does not need any central exchange or clearing house. In this trading, the traders and the brokers trade directly by calling each other and they are able to negotiate directly with each other. This calling and negotiation is done through different online trading platforms.
- Dealers:
The two biggest dealers of the FX market are the interbank and the central banks. This is because they have branches all over the world, so they trade with various currencies and make loans in different foreign currencies. As most transactions of the foreign exchange market are executed through the banks, they play the role of intermediaries.
- Indirect investment:
There are many companies who seek foreign exchange to pay for goods and services. This is popularly known as indirect investment. There are various institutional investors who use this market for indirect investment. They invest in companies globally simply by buying shares and stocks.
In the foreign exchange market, there is a popular adage that fits the trading perfectly, that is - there is no waiting for the opening in the forex market. Yes it is, because the FX market never sleeps. It is active for 24 hours a day and 5 days in a week.
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