What Is Forex
The foreign exchange or ‘Forex
Market’ is the world’s largest financial market. It is a non-stop cash
market where currencies of nations are traded off-exchange through
brokers.
It is estimated that, on average, $3.6 trillion is traded
each day in the world Forex markets. The vast majority of Forex trading
does not occur on any one centralized or organized exchange but through
brokers on the interbank currency market. The interbank currency market
is a twenty four hour market that follows the sun around the world.
Opening in Australia and closing in the U.S. Whilst the market exists
for organizations with exchange risk, speculators also participate in
the Forex markets in an effort to profit from their expectations
regarding shifts in exchange rates.
Who trades Forex
In
the early part, the Forex market was used by institutional investors
that transacted large amounts for commercial and investment purposes.
Today however, importers and exporters, international portfolio
managers, multinational corporations, speculators, day traders, long
term holders and hedge funds all use the Forex market to pay for goods
and services, transact in financial assets and speculate or to reduce
the risk of currency movements by hedging their exposure or increasing
their exposure through speculation.
In today’s information
superhighway the Forex market is no longer solely for the institutional
investor. The last 10 years have seen an increase in non-institutional traders accessing the Forex market and the benefits it offers. Trading platforms such as MetaQuotes MetaTrader
have been developed specifically for the private investor and
educational material has become more readily available. These have all
added to the attractiveness of the Forex market for the private
investor.
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