ABOUT THE FOREX TRADING SYSTEM AND MARKET
Definition of FOREX (Foreign Exchange) Market
The foreign exchange (currency or forex) market exists wherever one currency is traded for another. The Forex market is the largest market in the world in terms of cash value traded and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. Retail traders may only participate indirectly through forex brokers or market makers like IntiFX or banks.
The Foreign Exchange Market
Iternational trade dictates the necessity of trading the currency of one country for that of another to settle transactions. Institutions, corporations and even govenrments in the international marketplace will often need a certain currency to complete a deal, or to safeguard themselves from the effects of currency swings and rate changes. This system involving the exchange of different currencies has created the Foreign Exchange market, or FOREX, or FX. and more officially known as the Global Interbank Currency Exchange Market.
Like stocks, gold and real estate investments, the Foreign Exchange market has become a very important opportunity for the investment community. Forex trading provides certain additional advantages.
Margin System
You are able to leverage on contracts up to fifty times your margin deposit. That is, with 1% of the absolute value of contracts, you can enter the largest marketplace in the world. As long as you are able to maintain your margin requirements on the full contract value, you can continue to operate in the market indefinitely.
Maximum Liquidity
Being the largest market in the world with over $1.6 Trillion in value bought and sold daily, there is a huge volume of transactions that are executed and cleared. Unlike futures or the stock market, there is never a lack of buyers or sellers on the forex market. Therefore, it gives the investor the prerogative to open or close a position at will.
Attractive Pricing
Forex quotes are based on spot prices regardless of the transaction size. Prices are quoted on a net basis.
Effective Execution
Forex trade orders are executed and confirmed online or manually via a recorded phone call. Customers know immediately the rate at which the order is executed. Confirmed orders will always receive a single price execution.
Flexible Settlement
Forex system contracts opened can be rolled over daily for an indefinite period subject to roll-over fees.
Hedging Tool
Investors involved in international trade can minimize their currency exposure risks by using a Forex trading system.
Operation Of The Forex Market
The International Forex Market is a non-physical market and has no central exchange. The major participants in this foreign exchange trading market are Central Banks, multinational banks, large corporations, brokerage houses and individual investors. Forex agents offer various services to investors, including financial analysis, information gathering and market situation updates. Most transactions are conducted via the telephone or through online forex trading systems.
The high liquidity in the forex market is due to the enormous volume of transactions generated by the primary market called the “interbank market” where banks, large financial institutions, insurance companies and other large corporations deal with each other in huge quantities to manage their own currency risks. The secondary over-the-counter market, where retail clients participate in forex transactions, has benefited from this liquidity provided by the big institutions.
