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What is Forex?
The Foreign Exchange market, also referred to as the "Forex" or "FX" (Foreign +Exchange , For-Ex) market is the largest financial market in the world with a daily turnover of nearly 2$ trillion.
It is part of the bank-to-bank currency market known as the Interbank market.The 24-hour Interbank market literally follows the sun around the world, moving from major banking centers of the United States to Australia, New Zealand to the Far East, to Europe then back to the United States.
The FX market is considered an Over The Counter (OTC) or 'interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets. The participants engage in purchasing a currency against another simultaneously (a pair e.g. Euro versus Dollar US) for various reasons and purposes, however most participants are trading on the Forex market to have a positive differential on their entry price (Buy price) and exit price (Sell price), thus generating profits .Currency pairs move 24/24 at various speeds, depending on the global events, news, and probably as many factors as one can think of.
A single day in Forex is resumed in a 3 market session, even though all the participants are always actively monitoring the market and their positions, participants have taken the habit of thinking of an Asian session, European session, and US session.Currency pairs move 24/24 at various speeds, depending on the global events, news, and probably as many factors as one can think of.
A single day in Forex is resumed in a 3 market session, even though all the participants are always actively monitoring the market and their positions, participants have taken the habit of thinking of an Asian session, European session, and US session.Structure of The Market
The FX market is an over-the-counter market with no centralized exchange. Traders have a choice between firms that offer trade-clearing services.
Unlike many major equities and futures markets, the structure of the FX market is highly decentralized. In other words, there is no central location where trades occur. The New York Stock Exchange, for example, is a totally centralized exchange. All orders pertaining to the purchase or sale of a stock listed on the NYSE are routed to the same dealer and pass through the hands of a single clearing firm. This structure requires buyers and sellers to meet at the NYSE in order to trade a stock that is listed on this exchange. It is for this reason that there is one universally quoted price for a stock at any given time.
In the FX market there are multiple dealers whose business is to unite buyers and sellers. Each dealer has the ability and the authority to execute trades independently of each other. This structure is inherently competitive as traders are faced with a choice between a variety of firms with an equal ability to execute their trades. The firm that offers the best services and execution will capitalize on this market efficiency by attracting the most traders. In the
equities markets, the execution of trades is monopolizezed and there is no incentive for a clearing firm to offer competitive prices, to innovate, or to improve the quality of their service.Margin
In standard cash stock accounts, money should be deposited for the full amount of the position you are trading, or if you have a margin account, for at least half of the position. This is in contrast to the FX market, where only a small percentage of the actual position value needs to be deposited prior to taking on the trade. This small deposit, known as the margin, is not a down payment, but rather a performance bond or good faith deposit to ensure against trading losses. The margin requirement allows traders to hold positions much larger than their account value (up to 200x the size).
Margin requirements are as low as .5% meaning for every standard lot size of 100,000 units, you must commit $500. However, if you wanted to control a $100,000 in the stock market, you would have to deposit at the very least, $50,000. Even in the futures market you would have to deposit at least $5,000 to control a $100,000
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Market hours
Time Zone New York
GMT
Tokyo open 7:00PM 0:00 Tokyo Close 4:00AM 9:00 London open 3:00AM 8:00 London close 12:00PM 17:00 NY open 8:00AM 13:00 NY close 5:00PM 22:00
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