The FX Currency Trader on Foreign Currency Trading
Foreign currency trading is done in a foreign exchange market where one type of currency is exchanged or traded for another type of currency
. Currency trading is regarded as the largest financial market in the world. Large banks and investment companies, government banks, multinational firms, and financial institutions are among the players in this trading market also known as the Forex. The daily volume of trade in the Forex is approximately $3 trillion.
Trading is done in levels. The level of access for a trader is determined by the "line", the money with which one is trading. A trader only has access to the level in which he is trading. Trading currency has almost doubled since 2001. There is no central house or hub or exchange or clearing house as traders deal directly with each due to this OTC nature.
London, New york, Tokyo and Singapore are the main trading centers across the world. As the time zones differ, trading is done almost 24 hours a day.
Fluctuations in the rate occur due to changes in the inflation, interest rates of banks, GDP growth, trade deficits and surpluses, cross-border M&A deals, economic situations, financial health and some other macro economic conditions.
Currencies are traded for each other and each pair of currencies is a separate and unique product and usually denoted by XXX/YYY. During creation, the XXX is known as base currency is the strongest and YYY the weakest.
Currency speculation is done by speculators who do an important job of transferring the risk from those who can't bear to those who can bear it. Due to the risk they take up, speculators always face controversy. Economic and financial situations, political scenarios, and other psychological issues can affect the market and the risk being taken.
The FX Currency Trader on Foreign Currency Trading
By: JP Dugg
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