What is currency market FOREX
Market Forex (FOReign EXchange market) - the interbank market which has generated in 1971 when international trade has passed from the fixed exchange rates to floating. The major principle on Forex consists in an exchange of one currency for another. Thus the rate of one currency concerning another is defined very simply: a supply and demand – an exchange which both parties agree.
The currency market develops of two basic components: the market of exchange trade and out of exchange the currency market which actually is interbank. On it it is necessary the basic volume of the operations which are carried out on FOREX.
This market on volume surpasses all the others. The daily volume of transactions in market Forex is estimated in 1-3 billion dollars a day, and it makes from one up to three annual budgets of the USA. For comparison: the day time turn of the American stock exchange of securities makes 300 billion dollars, the joint-stock market - 10 billion dollars. Half a year is required to the New York joint-stock stock exchange to reach a daily turn of the currency market.
The future and share markets have one more essential difference and restriction: trade interrupts in the end of day and renews only in the morning of next day. Thus if you trade in the Russian market, and some events essential to the market have occured in the USA in the morning opening of the market can appear completely not such as you expected.
Forex is not "market" in traditional sense of this word. It does not have uniform center, it has no concrete place of trade, as, for example, currency futures. Trade occurs by phone and through terminals of a computer simultaneously in hundreds banks all over the world. Hundred millions dollars everyone are on sale and bought some seconds, as makes an essence of so-called currency trading.
For reception of the information on a condition of the financial markets in a mode of real time, and also financial and economic news the international information systems, such, as, for example, Tenfore are used.
Forex unites four regional markets: Asian, European, American, Australian. Exchange operations do not stop in current of all working week, the market works 24 hours per day. Practically in each of time zones there are the dealers, wishing to quote currency. The relative calm in market Forex is observed only from 23:00 up to 4:00 hours Moscow time. It is connected by that 4 o'clock in the morning - opening of the Tokyo stock exchange and 23 hours closing New York.
The basic participants of the currency market are: the central banks, commercial banks, currency stock exchanges, investment funds, exporters and importers, the broker companies, private persons.
The prominent features of the market attractive both for beginners, and for professional investors:
Liquidity: the market operates with huge monetary weights and gives free rein at opening or closing of a position of any volume practically under the market quotation existing at present;
Availability: an opportunity to trade 24 hours per day, the participant of the market does not test necessity to wait to react to this or that event;
Flexible regulation of system of the organization of trade: in the currency market the position can be opened on in advance target date at will of the investor that allows to plan in advance on time the future activity;
Cost: market Forex traditionally has no commission charges, except for a natural market difference bid/ask (between by purchase and by the sale, given to the trader bank);
Unambiguity of quotations: because of high liquidity of the market the majority of sales can be executed on a uniform market price that allows to avoid a problem of the instability existing in futures and other currency investments where can be during one time and for a determined price the limited quantities of currency are sold only;
Orientation of the market: movement of currencies has quite certain orientation which can be tracked for long enough interval of time. Each concrete currency shows only to it characteristic changes in time that gives investment managers of an opportunity of a manipulation in market FOREX.
The currency market develops of two basic components: the market of exchange trade and out of exchange the currency market which actually is interbank. On it it is necessary the basic volume of the operations which are carried out on FOREX.
This market on volume surpasses all the others. The daily volume of transactions in market Forex is estimated in 1-3 billion dollars a day, and it makes from one up to three annual budgets of the USA. For comparison: the day time turn of the American stock exchange of securities makes 300 billion dollars, the joint-stock market - 10 billion dollars. Half a year is required to the New York joint-stock stock exchange to reach a daily turn of the currency market.
The future and share markets have one more essential difference and restriction: trade interrupts in the end of day and renews only in the morning of next day. Thus if you trade in the Russian market, and some events essential to the market have occured in the USA in the morning opening of the market can appear completely not such as you expected.
Forex is not "market" in traditional sense of this word. It does not have uniform center, it has no concrete place of trade, as, for example, currency futures. Trade occurs by phone and through terminals of a computer simultaneously in hundreds banks all over the world. Hundred millions dollars everyone are on sale and bought some seconds, as makes an essence of so-called currency trading.
For reception of the information on a condition of the financial markets in a mode of real time, and also financial and economic news the international information systems, such, as, for example, Tenfore are used.
Forex unites four regional markets: Asian, European, American, Australian. Exchange operations do not stop in current of all working week, the market works 24 hours per day. Practically in each of time zones there are the dealers, wishing to quote currency. The relative calm in market Forex is observed only from 23:00 up to 4:00 hours Moscow time. It is connected by that 4 o'clock in the morning - opening of the Tokyo stock exchange and 23 hours closing New York.
The basic participants of the currency market are: the central banks, commercial banks, currency stock exchanges, investment funds, exporters and importers, the broker companies, private persons.
The prominent features of the market attractive both for beginners, and for professional investors:
Liquidity: the market operates with huge monetary weights and gives free rein at opening or closing of a position of any volume practically under the market quotation existing at present;
Availability: an opportunity to trade 24 hours per day, the participant of the market does not test necessity to wait to react to this or that event;
Flexible regulation of system of the organization of trade: in the currency market the position can be opened on in advance target date at will of the investor that allows to plan in advance on time the future activity;
Cost: market Forex traditionally has no commission charges, except for a natural market difference bid/ask (between by purchase and by the sale, given to the trader bank);
Unambiguity of quotations: because of high liquidity of the market the majority of sales can be executed on a uniform market price that allows to avoid a problem of the instability existing in futures and other currency investments where can be during one time and for a determined price the limited quantities of currency are sold only;
Orientation of the market: movement of currencies has quite certain orientation which can be tracked for long enough interval of time. Each concrete currency shows only to it characteristic changes in time that gives investment managers of an opportunity of a manipulation in market FOREX.
posted by alexsakne at 1:00 PM
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