subject: When Forex Can Be Traded [print this page] You can say that the forex market is a concentrated avenue for trading. If you want to learn about how the forex market operates then this article is something that you should read. From the pricing to the liquidity to the spreads, these are essential components that operate in the forex market. Here in forex trading, being able to find the best price can make a difference when it comes to profiting from the trade. You place an order and just before it is executed there is a deterioration in the price, what you have is slippage. According to some, slippage does not exist but it does, they are just clouded by the amount of money being traded daily. In the forex trade, slippage is a common occurrence and it can be attributed to the lack of liquidity at key price levels.
Considering how one liquidity pool applies to listed equity and futures markets, there are no cases of slippage in these other avenues of trade. The way that slippage is hidden in the forex trade is by means of spreads and undisclosed volume numbers since the exchanges that take place in this market are not displayed on any screens. Transactions conducted by the correct bank or broker leads to minimum slippage.
Trading normally happens on an exchange but this is not the case for the forex market which is part of the interbank market. In the interbank market, there are large commercial and investment banks that act as clients and they are handled by two main electronic broking systems. The orders are then dealt with using another tool which is a direct telephone based system.
The two broking systems are the private networks, an exclusive club based on credit lines, and they allow each bank to trade forex electronically between themselves. It is not possible for other traders to get a hold of the official interbank rates which are special exchange rates that only apply to this group.
When currency is traded in this market, the total amount pertains to forex liquidity. Based from this, brokers and traders know when it is a good time to conduct deals. You should take note of things like the time of the day, important support and resistance levels, and news flow announcements as well when it comes to the forex trade.
Here is where the net exposures of the currencies about to simultaneously be traded should be obtained by a trader who will transact on a multiple position scheme. This kind of information will allow you to have the option to close your multiple exposures in a single trade and this can save you money. Traders of all sorts will be able to control the market this way.
Once you get used to this kind of trading, you will be relying heavily on technical analysis techniques. All traders have their own strategies for trading and automating your strategy will be your best move yet. Trading is best done when things are automated.
If you use this, you will have more time for the other facets of trading. The system allows traders to see if their ideas can generate profits. Without this, you need to risk money in making real time investments.
by: Whitene
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