Forex is the name given to the foreign exchange market. This market exchanges currency between nations permitting companies in one country to pay for goods and services in another. This helps world trade and investments. If you are traveling to Europe, you go to your bank and exchange bucks for euros so you have money to spend on your trip. Your bank bundles this exchange with others and then exchanges the dollars for Euro Bucks through currency exchange.
The forex market has no physical location and is open for business twenty-four hours a day between Mon. morning in New Zealand thru Friday night in Asia. The average trading volume is over 3 trillion dollars a day. Profit markups are relatively low.
Traders on the forex market include central banks, enormous banks, companies, governments and currency investors. Tiny speculators do not trade in the particular currency market, but essentially trade through derivatives called futures contracts. Futures contracts are not legal in all nations, particularly emerging countries. Futures contracts account for roughly 7% of the total trading volume.
The smaller investors don't trade in the actual currencies, they trade in derivatives, sort of like the commodities market. Tiny investors make up about 7% of the total trading volume.
The market is divided into tiers, with the ten traders who do the most trading in the top tier. These are the big world banks. The margins here are tiny and the rate between the bid and ask prices are available only to this select group. This accounts for roughly 53% of the trade volume. The following tier of financiers includes large hedge funds, investment banks and global corporations.
Lots of the transactions, about 70%, are of a speculative nature. That is, they are done in the hopes of earning a return rather than an exchange for practical use. Average financiers can only gain access to this market thru a foreign exchange foreign exchange broker. Until fairly recently, their were very few restrictions on the practices of the brokers. There is an ongoing effort to break down and eliminate brokers who take trades that are in clash with the best interests of their clients.
Forex is a high hopeful market. During times of market doubt, traders will jump to historically "safe" or stable currencies like the Swiss franc. This drives the rate of exchange up for the franc in comparison to other currencies.
There are many types of derivatives with assorted levels of risk available to little investors. The most typical derivative is the futures contract which is often for three months. It is comparable to futures contacts traded on the commodities market. The spot contract is a futures contract for a brief period of time, usually 2 days. The forward contract helps limit risk as the money is exchanged on an agreed on date in the future. One type of forward contract is called a swap, where the 2 parties exchange currency for an agreed upon period. The safest derivative is the currency exchange option. Somewhat like a stock option, it gives the holder the right to exchange currency for a formerly agreed rate at a fixed upon date, but the holder has no need to make the exchange.
The forex market can be lucrative and has far more liquidity than other investments. Backers wishing to enter this market should check with other investors to locate a credible broker. Its wise, as with any investment stradegy, to do you homework and learn as much about the market as possible. It could be a awfully equitable investment for the clever trader and you can get your money when you need it. - 23309
The forex market has no physical location and is open for business twenty-four hours a day between Mon. morning in New Zealand thru Friday night in Asia. The average trading volume is over 3 trillion dollars a day. Profit markups are relatively low.
Traders on the forex market include central banks, enormous banks, companies, governments and currency investors. Tiny speculators do not trade in the particular currency market, but essentially trade through derivatives called futures contracts. Futures contracts are not legal in all nations, particularly emerging countries. Futures contracts account for roughly 7% of the total trading volume.
The smaller investors don't trade in the actual currencies, they trade in derivatives, sort of like the commodities market. Tiny investors make up about 7% of the total trading volume.
The market is divided into tiers, with the ten traders who do the most trading in the top tier. These are the big world banks. The margins here are tiny and the rate between the bid and ask prices are available only to this select group. This accounts for roughly 53% of the trade volume. The following tier of financiers includes large hedge funds, investment banks and global corporations.
Lots of the transactions, about 70%, are of a speculative nature. That is, they are done in the hopes of earning a return rather than an exchange for practical use. Average financiers can only gain access to this market thru a foreign exchange foreign exchange broker. Until fairly recently, their were very few restrictions on the practices of the brokers. There is an ongoing effort to break down and eliminate brokers who take trades that are in clash with the best interests of their clients.
Forex is a high hopeful market. During times of market doubt, traders will jump to historically "safe" or stable currencies like the Swiss franc. This drives the rate of exchange up for the franc in comparison to other currencies.
There are many types of derivatives with assorted levels of risk available to little investors. The most typical derivative is the futures contract which is often for three months. It is comparable to futures contacts traded on the commodities market. The spot contract is a futures contract for a brief period of time, usually 2 days. The forward contract helps limit risk as the money is exchanged on an agreed on date in the future. One type of forward contract is called a swap, where the 2 parties exchange currency for an agreed upon period. The safest derivative is the currency exchange option. Somewhat like a stock option, it gives the holder the right to exchange currency for a formerly agreed rate at a fixed upon date, but the holder has no need to make the exchange.
The forex market can be lucrative and has far more liquidity than other investments. Backers wishing to enter this market should check with other investors to locate a credible broker. Its wise, as with any investment stradegy, to do you homework and learn as much about the market as possible. It could be a awfully equitable investment for the clever trader and you can get your money when you need it. - 23309
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