What is Forex?
Forex means Foreign Exchange Market. Foreign Exchange Market is where foreign currencies are bought or sold, and we trade currency pairs. Here, buyers and sellers are involved in the sale or purchase of currencies from different countries. Forex market is the world’s biggest, most liquid market with an average daily trading volume exceeding $5 trillion.
Two types of a market in Forex
Spot Market: Spot Market is a public financial market where financial currencies and commodity stocks are traded for immediate delivery. Delivery means that money exchange is a very spot transaction in this financial market. Very shortly, the spot market form of the investment period will be two or three days.
Forward Market: Forward competition is a prospective investment in the market. This market is strategically dependent and standardized forward contracts are called futures contracts and traded on a futures exchange. The time set for future market investment is less than 90 days.
The Forex market is open from Monday morning to Friday evening. The Forex market is always open during the week. You can “buy and sell” and thus bet on rising or falling prices. This is special and allows Forex traders to make cash when exchange rates go up and down.
The Forex market includes many specific types of participants, the most significant positive being:
1. Central Banks and Commercial Bank
2. Companies of international trade
3. Forex brokers
4. Large, medium, and small institutional investors (i.e. investment enterprises, fund managers, etc.)
5. Common retailers
6. World Traveller
The actual buyers and sellers of foreign currencies- exporters, importers, tourists, investors, and world travelers. They are actual users of the currencies and approach Commercials banks to buy it.
Commercial banks are the second most important body of the foreign exchange market. The banks dealing in foreign exchange play a position of “market makers” in how they quote the foreign exchange rates for purchasing and selling foreign currencies regularly. They also operate as stock exchanges, helping to sweep out the gap between demand and currency supply. These banks purchase the currencies from the brokers and sell them to the customers.
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