What is Forex or Forexworld?
Forex has no centralized money; it is a decentralized global market where all country’s currencies trade. Forex is also known as FX, Foreign Exchange or Currency Trading. Foreign Exchange is one of the largest and most liquid markets in the world. The average everyday trading volume of Forex Factory exceeds above $5 trillion. Even if the world combines all stock markets, they will not even come close to this.
Forex is OTC market (Over the Counter) which provides Quote and volume data for securities traded over the world. FX exists at places where the two countries currency has been taking place. Foreign Exchange works five days in a week and 24 hours a day. It helps people to invest and trade efficiently and complete their foreign transactions without within moments.
Who trades Foreign Exchange?
There are several performers in the Foreign Exchange Market:
Banks is the key player of Forex, and the maximum and highest volume of currency which has traded in the Forex is interbank markets. Interbank market is a place where all the banks (Small, Medium and Higher Banks) trade currency with each other via e-networks. Banks do separate trading, and they have a desk for their trading and besides banks also provide facilities for clients. For the clients, banks work as a dealer and bank make their profits through Bid-ask spread. Major banks account for a high portion of total currency quantity trades.
- Central Banks
One of the significant and key players in the Foreign Exchange is Central Banks. Their open market controls and Interest rate strategies manipulate the currency rate to a considerable area.
They are the one who can liable for FX fixing. This is the administration of foreign exchange by which currency will exchange in the open market. There are three types of exchange rate through which central banks and other players of Forex work. There are Fixed, Floating and Pegged rates available till now.
Central Bank (Also called Government and Speculators) controls or enhances the competitiveness of a nation’s economy by taking actions in the Forex market. Sometimes Central Banks may involve in an invasion of currency to make their currencies overvalued and undervalued (Depreciate and Appreciate). Through periods of prolonged deflationary inclinations, for instance, a central bank may decrease its currency by generating further supply, which is then applied to buy a Forex. This efficiently reduces the national currency, causing exports more aggressive in the global exchange.
- Hedge Funds and Investment Managers
The second biggest performer in the Foreign exchange is the Investment Managers and Hedge Funds. They cover the largest collection of Forex just after the banks. The accounts of Pension Funds and Revenues mostly handled by Investment Manager, and they also trade currencies for those accounts. Investment Managers trade Foreign Securities, and they need to buy and sell currencies with the International Portfolios. Hedge Funds and Investment Managers perform trades of speculative currency also.
- Individual Investor
If we compare Individual investors with the Financial Institutions and banks, it seems that they have a deficient volume of trades. As we all know, Forex market is growing very fast, and it is increasing its popularity throughout the whole world. Retails Investor used a combined strategy of Fundamental and Technical Analysis to trade currency. Whereas Technical Analysis helps them to know about Averages, Price pattern, Support & Resistance, and other Technical Indicators. On the other side, Fundamental Analysis helps them to understand about the Monetary Policies, IR parity, Inflation rates, etc.
Corporation used Forex exchange to grow their business overseas or to Import and Export goods at their region from one place to another. Let see an example for the better understanding, A European Steel producer that imports components from Britain and sold the final goods in India. When the final sale has made, The Indian currency must be exchanged in Euros. The European corporation must exchange Euros for pounds to buy the components from Britain.
Note: Corporations also do the currency swap agreement to reduce the foreign currency exposure risk.
Forex Factory – A Knowledge Base
When Traders do Forex trading in the signals of Forex market, a deposit of small margin allows traders to manage a significantly larger rate of a total Contract value. Leverage gives an opportunity to the traders to make profits, and it also helps them keep their risk of losing money at a minimum level.
As per the point of view of Assets, the liquidity of Assets is the capability to be sold or purchased without any premium or discount.
When we heard that market is too liquid, it usually reflects that the quantity of the number of traders is very high. Thousands of Banks and Individual traders trade currency on a regular basis, that’s why Forex Market is extremely liquid.
- Profits in “Rising” and “Falling” Market
If you have the right knowledge of Forex trading and you use it wisely, you can make profits in the failings and rise of the market. All you have to do is to keep your knowledge up-to-date and be aware of the markets speculations and changes.
Which is the best Forex Trading Software?
In a world, where people can find an alternative for everything, and It seems little difficult to find out which is the best Forex Trading Software available in the Market which can help traders to do trading easily and make a profit with quick services of software.
Now here’s list of a bunch of brokers who provide one of the best Forex Trading Software, choose suitable software according to your business or trading requirements. Whatever software you choose for your trading or official use, you have to understand that software only shows the way to do it but it’s you who will give it a command to complete it. Be aware of the market risk and make millions.