7 Facts About Forex Market

7 Facts About Forex Market

04 Mar 2021 03:08 PM
 

Contrary to popular beliefs, the forex market's importance is not just constricted to commercial banks and large corporations. The smallest of the operations involving an individual can also feel the impact of the forex market's volatility just at a lower magnitude due to the lesser volume of the forex transactions involved. Unbeknownst to them, someone who is planning a foreign trip, a smaller firm that imports coffee beans from another country, an Indian supplier exporting machinery across the borders, or just an individual residing in a foreign country sending money back home, will encounter the influence of foreign currency exchange rate fluctuations and forex rate margins quoted by their banks. 

Moreover, the implementation of effective risk management strategies will ensure that the organizations or individuals with dealings in foreign currency are safeguarded against forex risks. Even the investors involved in online forex trading ensure profit maximization with the right forex trading strategies that adhere to certain guidelines to mitigate risks of fluctuating forex rates. Thus, it is not surprising that the forex market witnesses huge participation from all over the world, making it the largest financial market.  Besides the astounding fact regarding the daily trade volume of the forex market being over $5 trillion, there numerous other facts that one may not know about. Now that the pivotal nature of the forex market to individuals, traders and corporations alike has been established, here are some facts about the forex market that are not commonly heard. 

  1. The forex market is the biggest in terms of turnover due to the various characteristics it offers like high leverage, high liquidity, operational for 5 days and 24 hours a week wherein foreign currencies are traded across all time zones. The leverage provided to the traders can go as high as 500:1 with no need of making an upfront payment of the full trading amount.  
  2. Since forex is considered an over-the-counter market, there is no centralized body governing the forex market. It is regulated by several independent and government bodies around the world to maintain that currency trading remains ethical and fair. 
  3. Forex trading or online currency trading in the forex market was not as accessible in the 1990s as it is now. In fact, only the banks and institutions that had access to huge capital in the tunes of $40 million to $60 million could avail forex trading. Now, the scenario has completely changed with the advancements in technology and the emergence and development of online trading platforms. The barrier to entry has been reduced so much so that an individual can very readily begin his forex trading journey. 
  4. The forex traders participating in the forex market are characterized into two types: bulls and bears. The traders who expect the markets to rise are referred to as bulls, whereas the traders who expect the market to fall are referred to as bears. The label comes from the distinctive attacking style of both the animals, wherein a bull attacks with its horns with an upwards motion as opposed to a bear which charges and attacks in a downward motion.
  5. Due to the fact that the maximum transactions in the forex market involve the US dollar, many might assume that the US is the centre of forex trading. However, the reality is far from that assumption since 41% of all forex transactions occur in the UK, and the US accounts for only 19% of it, which is a massive difference. 
  6. The potential of earning profits, albeit with equal risks, exists regardless of whether a trader wants to sell and buy and irrespective of market movements. The unique setup of forex trading presents opportunities for one to trade and profit anytime wherein currency pairs are traded that involve simultaneous buying of one currency and selling of another. Some examples of currency pairs traded in the forex market are EUR/USD, AUD/USD, etc.
  7. In the 1800s, the synchronization of the rate between the Pound and the US Dollar, in the absence of optical cables used now, was achieved using a large communications cable that ran across the Atlantic, connecting London and New York Stock Exchanges. This led to the now prevalent nickname for the GBP/USD pair often used by traders in the forex market known as the 'cable'.

These are a few of the many facts associated with the forex market, the understanding of which is important for individuals, organizations and traders to mitigate forex risks and remaining abreast with the potential opportunities for enhancing savings on forex transactions. Myforexeye offers forex news, daily, weekly and monthly forex reports along with high-quality research so that one can improve their knowledge of the forex market and access information related to it on just one platform. Our services also include smooth and quick financing, forex risk management, better forex rates with transaction process outsourcing, access to live forex rates etc.

Conclusion

Myforexeye is committed to providing a resolution to your Forex and trade finance needs and filling the gap of the unmet demands in terms of credit and financial guidance to MSMEs and larger corporates. Through our team of experienced professionals and consultants well versed in the field of forex and trade finance, we provide streamlined forex solutions for one’s convenience and at their disposal. Corroborating our efforts of providing solutions that are effective to companies for realizing their maximum potential are the latest technology and assistance from the veterans of the forex and trade finance industry. It is our objective to aid our clients in making savings and eliminating the aspect of hidden commission fees payable to the bank. Our user-friendly digital platforms - web portal and mobile app, enables one to access the best quotes for all types of forex conversions as well as avail import and export finance and calculate interest costs to make informed decisions. 

Speak to one of our specialists to acquire a detailed understanding of forex solutions offered by Myforexeye. 

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