The Global Currency Market or FOreign EXchange market or Forex or Fx is a huge financial market with daily volumes of 5 trillion US Dollars

THE GLOBAL CURRENCY MARKET

The Global Currency Market or FOreign EXchange market or Forex or Fx is a huge financial market with daily volumes of more than 4 trillion US Dollars. The Forex market is a pure OTC (over-the-counter) market and that means that there is no centralized service. The participants in the Forex market are linked each other electronically via computers, fax and telephone and all together form an integrated currency exchange.

 

24/5 OPEN MARKET

Currency trading is conducted via the ECN network (Electronic Communication Network) in many different markets around the world. The Forex market is open 24/5 -from 5 pm EST on Sunday until 4 pm EST on Friday.

The Forex market is open 24/5

» More on  Forex Market Sessions and Time Zones

 

WHO ARE MAJOR PLAYERS IN THE FOREX MARKET?

There are many different participants in the Foreign Exchange market that include central banks, commercial banks, hedge funds, investment companies, commercial companies, retail investors etc.

The Interbank Market

The top Forex players are coming from the interbank market, where large banks and hedge funds can exchange currencies one against another. The top Interbank platforms for trading currencies are EBS (ICAP) along with Thomson Reuters.

Table: The Major Players in the Interbank Market

Euromoney, Survey 2015

Data: Euromoney, Survey 2015

THE RETAIL FOREX TRADING

Since the birth of Online Forex Trading 15 years ago more and more retail traders see the Forex Market as an opportunity for their Financial Freedom. Today there are tens of millions of active Forex traders from all over the world.

The Online Forex Trading

The online Forex trading requires the existence of a Forex Trading Platform, an Internet Connection and a Forex Broker.

◙ The Platform MetaTrader-4 is the clear industry standard among Forex Traders but there are many other platforms too such is the cTrader, the NinjaTraders, the TradeStation etc.

◙ The quality of the internet connection is important for Day-Traders, Robotic Traders, and News-Traders

◙ The Online Forex Brokers are categorized by the method they use to execute their client orders. Therefore traders may choose among a Market Maker or an ECN/STP broker. Market makers execute orders via a dealing desk (DD) and actually create a market within a market. From the other hand, ECN/STP brokers are No-Dealing Desk (NDD) brokers and that means that they transfer their client orders directly to their liquidity providers (most commonly large banks).

WHY THE FOREX RATES FLUCTUATE?

The Forex rates fluctuate according to fundamental changes but also according to the general market psychology. The demand and the supply for a Forex currency are determined by the rate of growth of the underlying economy combined with many other factors and especially as concerns the level of interest rates.

 

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MAJOR ECONOMIC INDICATORS FOR FOREX INVESTORS

When an important economic indicator is significantly changed then the Forex market reacts very dynamically. These are some of the most Important Economic Indicators capable of altering the value of Forex rates in a few minutes.

1. Interest Rates derision changes

2. Gross Domestic Product (GDP) changes

3. Nonfarm Payrolls / Unemployment

4. Inflation (CPI)

5. Trade balance.

6. Current Account

7. Foreign Purchases of Treasuries

8. Retail Sales

These are the times (EST) when Forex Investors should pay extra attention either to trade the news either to avoid them.

Forex Currency

Economy

News Releases Time (EST)

CHF

Switzerland

1:45 - 5:30

EUR

European Union (Eurozone)

2:00 - 6:00

GBP

Great Britain

2:00 - 4:30

CAD

Canada

7:00 - 8:30

USD

United States

8:30 - 10:00

NZD

New Zealand

16:45 - 21:00

AUD

Australia

17:30 - 19:30

JPY

Japan

18:50 - 23:30

 

MAKING MONEY FROM TINY CURRENCY FLUCTUATIONS

Compared with the significant price fluctuations in the Equity Markets, the daily fluctuations in the Forex market may be considered as small. In most cases, currency pairs are moving maximum 1.0% on a daily basis. In other words, the Forex Market is not very volatile in absolute numbers. What makes the Forex Market lucrative to traders around the world is the ability to leverage your trades combined with minimal spreads:

(1) High Capital Leverage (up to 500:1, gives the ability for huge profits even from tiny currency movements)

(2) Minimal Spreads (they are essential in order to be able to take advantage of the high capital leverage)

 

The Role of Liquidity

Liquidity in the Forex Market means tighter spreads and tighter spreads mean lower transaction cost, therefore more profits for traders. The more liquid a currency pair the greater the opportunity for making money even from tiny movements.

The most liquid Forex pairs are:

(1) EURUSD (European Currency against the US Dollar)

(2) GBPUSD (The British Sterling against the US Dollar)

(3) USDJPY (The US Dollar against the Japanese Yen)

(4) USDCHF (The US Dollar against the Swiss Franc)

The above 4 pairs are considered the most important assets among Forex traders. There are a few more pairs that are offered in very tight spreads:

(5) EURCHF (European Currency against the Swiss Franc)

(6) EURGBP (European Currency against the British Sterling)

(7) EURJPY (European Currency against the Japanese Yen)

(8) USDCAD (The US Dollar against the Canadian Dollar)

(9) AUDUSD (The Australian Dollar against the US Dollar)

(10) NZDUSD (The New Zeeland Dollar against the US Dollar)

 

MORE ON CARRYTRADER

■ COMPARE PROVIDERS

Forex Brokers for Day Traders

Brokers for Carry Traders

Automated Forex Systems

Rebate Plans      
■ CURRENCY PAIRS EURUSD GBPUSD USDJPY EURGBP AUDUSD NZDUSD USDCAD
■ GLOBAL MARKETS » Gold

» Crude Oil

» Natural Gas

» Stock Market

» Soft Commodities

 

 

■ LEARNING RESOURCES » Currency indices » CBOE Indices

» Famous Investors

» Forex Fundamentals

» Foreign Exchange Reserves

» Carry Trade Information

 

 

Introduction to the Forex Market

CarryTrader.com

Foreign Exchange

The Foreign Exchange Market is the largest Financial Market in the world with daily volumes of more than 4 trillion USD. When trading Forex you need a reliable and high-regulated Forex broker and a trading strategy that works:

(i) Introduction to Forex Trading

(ii) Forex Brokers for Traders

(iii) Major Currency Pairs

(iv) Automated Forex Systems

Global Markets

Trading the Financial Markets requires a perfect understanding of how demand and supply shift from time to time. Equities tend to follow bullish cycles lasting 7-9 years, and after, bearish cycles lasting 3-4 years. Energies tend to follow annual time patterns while Precious Metals tend to follow longer time cycles:

(i) Gold Trading

(ii) Crude Oil Trading

(iii) Rebate Plans

Learning

If you are a trader, learning is a non-stop process. CarryTrader offers a wide variety of educational resources including trade tools, techniques, and strategies:

(i) Currency Indices

(ii) Famous Investors

(iii) Technical Analysis

(iv) Brokers for Carry Traders

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