7 Facts You Never Knew About Forex Services Market

7 Facts You Never Knew About Forex Services Market

02 May 2019 12:29 PM

Some facts about forex services market

Forex market comprises of not just converting one currency to another but also understanding the extended services related to forex. Forex is an integral part of an importer and exporter and thus for any international trade related transaction. Some interesting facts of forex market are

  • Currency market is the biggest market in terms of turnover. Every time a trade takes place, one currency is converted to another currency. This increases the volume as currencies are trade not just across one country to another but across all time zones. This causes the trading volume to increase considerably going up to $5 trillion a day. It is about 12 times the volume as done by global equity markets.
  • It is not just business traders who form part of the currency markets. There are many who buy or sell currency for speculation to take advantage of the fluctuation in the currency movements. Often it’s the speculative traders who drive the prices based on their views on currency. About 90% of volume is speculative in nature.

  • Amongst all the widely traded currencies like US Dollar, Euro, British Pound, Japanese Yen, Swiss Franc, Australian Dollar, etc United States Dollar is the most traded currency as it is the base currency for all currencies. Even though there are many cross currencies like EURJPY, EURGBP, GBPJPY, etc the USD is the currency which is traded the most – making US economy the most watched out for vis-a-vis the other currencies.
  • It’s often thought that the maximum volume of forex transaction is generated from United States of America as the US Dollar is widely traded currency, but many traders are surprised when they are told that more than 40% of all forex transactions happen in UK.
  • When one understands the volume of total transaction which happens in the forex market, one imagines only the biggies participating in the market. But the trading opportunities attract not only the big financial institutions or large corporates, but also small individual trader has an opportunity to trade in forex services market. Thus irrespective of volume, one can trade in forex market unlike earlier time where a minimum of $40-60 million dollars were needed. Wealth creation has been possible for many multi billionaires through currency trading.
  • Traders are called bulls and bears accordingly to their attacking position. Optimistic traders believe the currency market will appreciate and prices will go up are the bulls who strike upwards. Whereas bears swipe downwards, thus the traders are pessimistic on the markets and expect the markets to fall.
  • Trading in currency doesn’t happen through a regulated exchange. There is no central governing body or rules which the traders have to abide by. Based on the trade agreement, the traders simply trade with each other. Traders self regulate the market which leads to fairness in the market.

These are few amongst the many facts which are part of the forex market. It is interesting to study the currency market deeper to gain an insight in this.

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