Foreign exchange market is the biggest global market in the purchase and exchange of currencies. It comprises of participants who can participate, buy, sell, exchange and speculate on trading markets. The market comprises multiple different entities, like bank, companies, investment ventures, brokers, investors, and hedge funds. It is a large financial market that has proven to be a major money-making venture that helps out people in making several earnings.
It is not an individual market that has a few computers, brokers and investors in a small geographical area. Instead, people all around the world are participating in the venture with crores of computers taking part along with numerous banks, investors and brokers. Spread around a large number of countries this is something that provides income to a large population around the world. Forex has a list of brokers who involve in the trading process in the place of others and actively invest their time and money in trading currency pairs.
Bidding by brokers for currency pairs are genuine and mostly to know the current currency rates in other countries to do successful and preemptive trading. There are two important types of trading in the global market. These differ on how the trading is done and who the end parties are who benefit in this venture. The two kinds of market trading are
- Over the counter-marketing is when the individuals in the market actively participate in the trading Similarly, all the money exchanges are between the individuals only and there is no role for anyone else in this process other than brokers.
- The interbank process as the name suggests is between the banks that participate in the process of trading. No individuals take part but the thousands of banks in the network of trading mainly take part in the process. It is much more complex as the currency rates affect the banks the most, especially their worth in this area. They trade for many purposes. They trade on behalf of their clients, for working with their balance sheet and even setting up of hedge funds.
The market is open overnight all the five days of the week. The market opens up on Monday morning in Asia and works continuously till Friday Afternoon in New York. It is a continuous process without breaks once it has started and provides a regular trading experience.