Foreign Exchange Market is known with many names; Currency Market, Forex Market or FX Market. Obviously it is a market where people exchange currencies from different countries. Transactions are simple. People purchase a block of one currency by paying with a block of another currency. Naturally it is the most liquid market in the world. The daily volume of trade currently exceeds USD $5 trillion.
Major Players in the Market are:
- Large Banks
- State/Federal Banks
- Currency Speculators
- Large Corporations
- Governments
- Financial Institutions (Hedge Funds, Investment Firms, Brokers)
Major Forex Trading Centers
- London
- Newyork
- Tokyo
- HongKong
- Singapore
The Trading virtually goes on forever as the Asian trading session ends, the European session begins, followed by the North American session and then back to the Asian session. This 24/7 nature of market is only disrupted by weekends. So we can safely say that Forex Markets remain open from 5pm EST on Sunday until 4pm EST Friday.
Major Currencies Ranked by Trading Volumes
| Rank | Currency | Symbol |
| 1 | United State Dollar | USD ($) |
| 2 | Euro | EUR (€) |
| 3 | Japanese Yen | JPY (¥) |
| 4 | Pound Sterling | GBP (£) |
| 5 | Swiss Franc | CHF (Fr) |
| 6 | Australian Dollar | AUD ($) |
| 7 | Canadian Dollar | CAD ($) |
| 8 | Swedish Krona | SEK (kr) |
| 9 | HongKong Dollar | HKD ($) |
| 10 | Norwegian Krone | NOK (kr) |
Terms you Must Know
In order to fully understand Forex Market we need to learn few of basic terms.
- Exchange Rates
- Market Makers
- Spot Transactions
- Forex Swaps
- Forward Contracts
- Options
- Bid/Ask Spread
- Pips (Percentage in Points)
- Standard Lot
Forex Market Fundamentals
Although Forex is an over the counter market bound to be governed by Supply and Demand. Still there are some Economic, Political and Psychological factors that play with the market. It is very important to know about them as they serve as a backdrop of all trade and trends. Forex Market can never be understood without understanding those fundamentals first. These are:
- Government budgets
- Balance of trade
- Inflation
- Economic growth & Outlook
- Political Stability
- International Events
- Rumors
- Economic Data and Reports
- Technical Analysis
I think this is enough for today.. Thanks to following sources, Our quest to learn more about Forex Markets and Trading is on right path. Through the course of this week and next we will try to learn more about terms used Forex Market & Its fundamentals.
3 comments:
couldn't have been explained in a simpler/better way...
A great introduction to Forex. I enjoyed your post. Thanks for listing those major Forex trading centres. From today only, I will start learning the forex terms you have listed. I hope one day, I will become a successful Forex trader.
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really good article, thank you for plenty of information. You can read more and open your own Swiss bank account with online trading platform at http://open-bank-account.com
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