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Market Size and liquidity

The foreign exchange market is the most liquid financial market in the world. Traders include large banks, central banks, institutional investors, currency speculators, corporations, governments, other financial institutions, and retail investors. The average daily turnover in the global foreign exchange and related markets is continuously growing. According to the 2010 Triennial Central Bank Survey, coordinated by the Bank for International Settlements, average daily turnover was US$3.98 trillion in April 2010 (vs $1.7 trillion in 1998). Of this $3.98 trillion, $1.5 trillion was spot foreign exchange transactions and $2.5 trillion was traded in outright forwards, FX swaps and other currency derivatives.

Trading in the UK accounted for 36.7% of the total, making UK by far the most important global center for foreign exchange trading. In second and third places, respectively, trading in the USA accounted for 17.9%, and Japan accounted for 6.2%.

Turnover of exchange-traded foreign exchange futures and options have grown rapidly in recent years, reaching $166 billion in April 2010 (double the turnover recorded in April 2007). Exchange-traded currency derivatives represent 4% of OTC foreign exchange turnover. FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts.

Most developed countries permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts. A number of emerging countries do not permit FX derivative products on their exchanges in view of controls on the capital accounts. The use of foreign exchange derivatives is growing in many emerging economies.Countries such as Korea, South Africa, and India have established currency futures exchanges, despite having some controls on the capital account.

The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. Many large banks may trade billions of dollars, daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, which are trading desks for the bank’s own account. Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for large fees. Today, however, much of this business has moved on to more efficient electronic systems. The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago.

Commercial companies

An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency’s exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.

Investment management firms (who typically manage large accounts on behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.

Some investment management firms also have more speculative specialist currency overlay operations, which manage clients’ currency exposures with the aim of generating profits as well as limiting risk. Whilst the number of this type of specialist firms is quite small, many have a large value of assets under management (AUM), and hence can generate large trades.

Retail foreign exchange traders

Individual Retail speculative traders constitute a growing segment of this market with the advent of retail forex platforms, both in size and importance. Currently, they participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated in the USA by the CFTC and NFA have in the past been subjected to periodic foreign exchange scams.[11][12] To deal with the issue, the NFA and CFTC began (as of 2009) imposing stricter requirements, particularly in relation to the amount of Net Capitalization required of its members. As a result many of the smaller and perhaps questionable brokers are now gone or have moved to countries outside the US. A number of the forex brokers operate from the UK under FSA regulations where forex trading using margin is part of the wider over-the-counter derivatives trading industry that includes CFDs and financial spread betting.

There are two main types of retail FX brokers offering the opportunity for speculative currency trading: brokers and dealers or market makers. Brokers serve as an agent of the customer in the broader FX market, by seeking the best price in the market for a retail order and dealing on behalf of the retail customer. They charge a commission or mark-up in addition to the price obtained in the market. Dealers or market makers, by contrast, typically act as principal in the transaction versus the retail customer, and quote a price they are willing to deal at.

Unlike a stock market, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest commercial banks and securities dealers. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and not known to players outside the inner circle. The difference between the bid and ask prices widens (for example from 0-1 pip to 1-2 pips for a currencies such as the EUR) as you go down the levels of access. This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the “line” (the amount of money with which they are trading). The top-tier interbank market accounts for 53% of all transactions. From there, smaller banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size”.[9] Central banks also participate in the foreign exchange market to align currencies to their economic needs.

In Forex Trading. Traders tend to select a specific currency to be traded. Choose a currency trader who traded based on:

• Spread or the difference between the selling price or purchase price is relatively small
• Traders considered easier to analyze the movement of currencies of certain countries than others

The currency most widely traded can be divided into two types: major and minor. Major currency is the currency that fall most heavily traded, popular and greatly affect the forex market. Major currencies are USD, EUR, GBP, CHF, JPY, AUD and CAD. While the minor currencies are currencies other than the currency.

currency Currencies in Forex Trading

Currencies are traded in pairs (pair). All currency pairs with USD is also called the major pairs (pairs uatama). Major most widely traded pairs are: EUR / USD, GBP / USD, USD / JPY, and USD / CHF.

Why the currency must be in pairs? This happens because in every foreign exchange transaction, there must be an exchange between currencies or collectively, the sale and purchase transactions. If you swap rupiah to the dollar, then you are said to be buying dollars and selling dollars. Whereas if you exchange your dollars with the dollars, then say you are selling dollars and buying dollars.

The first currency in the pair is called the base currency (major currencies) while the second currency in the pair is also called the cross currency (the currency of the opponent). This means that there is standardization in the world of forex currency pairs. Example: EUR / USD unusual written upside USD / EUR. If you want to buy EUR / USD, is unusual if you say want to sell USD / EUR. Namu must say you buy EUR / USD.

Indeed there are many traders (fund managers) are making money and doing business in a professional and responsible to fund their clients. But however much better if you own a start trading and making money on the internet through online forex trading without “hand over the fate of” your funds to another party. Why?

1. Because if you’ve managed to make money online from forex trading with profit stable and constant, then you will not be forever dependent on other parties (fund manager or your boss)
2. In forex trading forex there are so many opportunities (ways and trading techniques) in producing and making money. What you need is to find a trading system (trading system) your own personal. That is how or techniques that are proven profitable forex trading for you, consistent, and reliable (reliable). If you’ve found your personal trading system, then the gates of success already in sight
3. If you are already proficient and successful in the business of online trading forex (foreign exchange), will work FOR YOUR MONEY. No rule you will be “prompted” by a friend or relative to play their funds. We ourselves know some traders who have found their own trading system, became very successful and then play their client funds to a count of hundreds of thousands of USD (billion dollars) to millions USD

The foreign exchange market (forex, FX, or currency market) is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies.

The primary purpose of the foreign exchange is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import British goods and pay Pound Sterling, even though the business’ income is in US dollars. It also supports direct speculation in the value of currencies, and the carry trade, speculation on the change in interest rates in two currencies.

In a typical foreign exchange transaction, a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market began forming during the 1970s after three decades of government restrictions on foreign exchange transactions (the Bretton Woods system of monetary management established the rules for commercial and financial relations among the world’s major industrial states after World War II), when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

Forex investments are those made buying and selling currencies especially the dollar, euro and sterling. This market is driven by the Internet and is practically running 24 hours a day, 7 days a week (See also Beware of False Forex Investment Companies).

Such investments can be very risky because it handles plenty of variables, it is recommended to have a prior study of the entire market to find really like is that it must operate correctly.

For the management of forex investments there may be some robots who are responsible for all the operations in this market, no doubt like to know is how reliable are these.

These robots can provide a great help to operate the forex market because they are responsible for virtually all the operations and manage all our accounts.

But equally we must have a knowledge of everything that represents the forex market not to run high risks of loss, just as there are many free sites and evidence with which we can learn to make investments.

Already with the previous study we can count on the help of the robot as it could be an excellent complement to achieving a better investment and so no chances as high.

The end of the forex market investments are a way to achieve financial freedom, but always seeking the best help for not going to make mistakes.

Forex, currency or foreign currency, it is the change of currency from one place to another, to a current market price. Forex is about investing money in foreign currencies to profit by selling at a higher price, which he hopes, only to buy another at a lower price.

In early trade, many traders were not clear on trade in Forex, which is short for “foreign” because it did not receive much publicity through the media (Read the full truth about Forex).

It is the largest financial market in the world with a potential for rapid and large gains and a significant number of investors. The advent of Internet technology is what made significantly expand the trade in Forex, and access to various types of investors.

A decade ago, currency trading was limited only to large banks and financial firms as they were the only ones with access the tools and methods needed to trade in Forex market. However, recently, due to the promising efficient online platforms, technology has advanced to the point of being accessible to every dealer, who wants to trade or invest in Forex. Read the rest of this entry »