The FOREX can also be called as Foreign Exchange, FX or currency. The FOREX market started in Chicago Mercantile Exchange in the year 1972 and hit all markets simultaneously.
The FOREX market situated everywhere, where one country’s cash is traded for another country’s cash. This is the largest market technique, when it comes to cash, central banks, conglomerate corporations, trading between large banks, financial institutions and markets, governments and currency speculators. Retail traders are one of the small divisions of this type of market. Generally, they used to contact directly to banks, brokers and FOREX scams. The FOREX markets are completely different from other types of markets, because of:
- Volume of trading.
- Market liquidity.
- Verity of Traders.
- Geographical scattering.
- Twenty-four hours marketing.
- Different Exchange Rates.
According to survey of BIS Triennial Central depository fund, the daily income of international FOREX is $1.9 trillion in March 2004.
- Spot – $600 billion.
- Derivatives – $1,300 billion. (FOREX- $100 billion, $1,000- FOREX swap, FOREX outright- $200 billion).
FOREX uniqueness:
There is no exact cohesive FOREX market and single dollar rate, since over-the-counter (OTC) panorama of markets. And further FOREX is interrelated with huge number of socks, where exchange devices are traded. Often, the FOREX rates used to be very close; otherwise they may affected by arbitrageurs.
The major FOREX trading centers are situated in Tokyo, London and New York, but banks all over the globe participating in FOREX trading. As the U.S session ends, Asian session begins, then the European session, and then again U.S session. FOREX traders are always waiting for breaking news, rather than market trend.
Data hiding is approximately not possible in FOREX trading, because entire FOREX market is depending upon monetary flows and prospective changes in monetary flows, such as inflation, GDP augmentation, funds, surplus, deficits, interest tax and worldwide inexpensive circumstances. One of the main advantages for the banks is up to date data can be seen globally by client tidy course.
The essential element of FOREX market comes from the reasonable behavior of companies looking for foreign exchange to pay for commodities or armed forces. Small companies are not getting that much of opportunities to earn more money as compared to speculators and banks, because of short impact on FOREX market rates.
Several multinational companies have a random blow, when very large positions are covered due to exposures that are not extensively recognized by other market participants.
National central banks are playing one of vital roll in the field of FOREX markets. Their main agenda is to control the money flow, interest rates and inflation and generally targeting on different currencies rates. They are always looking for FOREX reserves for stabilizing the market. If companies are moving in loses, then they are always looking for evidence rather than bankrupt.
The main advantages of FOREX trading are, Ask/ Bid Spread rates, Margins requirements, twenty-four hour market, limit down/No limit up and sell before you buy, Equal Prospective in rising and falling FOREX trends etc.