The foreign exchange market

The foreign exchange market ( English : the foreign exchange market, forex ) or an abbreviated type of forex trading or currency trading transactions of a country against another country's currency (the currency pair / pair) involving major financial markets in the world for 24 hours continuously.

Rotating movement of the foreign exchange market from the market New Zealand and Australia which took place at 5:00 to 14:00 pm , the market continued to Asia , namely Japan , Singapore , and Hong Kong which took place at 7:00 to 16:00 pm , to the European markets of Germany and the UK which took place at 13.00 -22.00 pm , to market the United States which took place at 20:30 to 10:30 pm . In the development history, owned central bank reserves of countries with the largest foreign currency even be defeated by the power of free foreign exchange market.

According to the survey BIS ( Bank for International Settlements , the world's central banks), which is conducted at the end of 2004, the foreign exchange market turnover reached more than USD $ 1.4 trillion per day. Given the level of liquidity and accelerating the movement of high prices, foreign exchange has also become the most popular alternative because the ROI ( return on investment or return on investment) and profits will get is more than the average trade in general. Due to the rapid movement, then the foreign exchange market also has a high risk.

Market capitalization and liquidity:

The foreign exchange market is a unique market because:

trading volume

a very big market liquidity

the number and variety of traders in the foreign exchange market

geographical distribution

trading period is 24 hours a day (except weekends)

variety of factors that affect exchange rates

According to BIS , the average foreign exchange market turnover world per day estimated worth $ 3.21 trillion, which is divided into:

$ 1,005 billion in spot transactions

$ 362 billion in market delivery contracts ( forward contracts )

$ 1,714 billion in the swap market

$ 129 billion is estimated as the difference in reporting

In addition to outside turnaround "traditional" is, of $ 2.1 trillion traded in the derivatives markets.

Foreign currency forward contracts were introduced in 1972 at the Chicago Mercantile Exchange grew rapidly in recent years, but the volume is still only 7% of the total volume of the foreign exchange market trading.

According to data from the International Financial Services , London ( IFSL ), overall daily turnover of traditional foreign exchange market averaged 2.7 billiun total value of the U.S. dollar in April 2006. Estimates are based on data from the middle of the Foreign Exchange Market Committee ( Foreign Exchange Committee ) in London, New York, Tokyo and Singapore

On direct foreign exchange trading (OTC, brokers and dealers negotiate directly without going through exchanges or clearing. Biggest trading centers are geographically located in London, England, which according to IFSL contribution is estimated to have increased from 31.3% in April 2004 to 32.4% in April 2006

Characteristics of foreign exchange trading

There is no uniformity in the foreign exchange market. With the transaction outside the stock exchange trading (over the counter) as the traditional market of foreign exchange trading, a lot of the foreign exchange market are interconnected with each other where different currencies traded, so it does not directly mean that "there is no single exchange rate currency but the dollar exchange rate varies depending on which bank or which market participants transact ". However, in practice the difference is often very thin.

The main trading centers are in London , New York , Tokyo and Singapore , but banks throughout the world are parties to them. Currency trading happens continuously throughout the day. Asian markets ended when the European markets opened, and by the time the European markets ended the American market began and then back to the Asian session, excluding weekends.

Very little or even no "insider trading" or information "insiders" (Insider trading) that occurred in the foreign exchange market. Fluctuations in currency exchange rates are usually caused by actual monetary flows as well as by expectations of monetary flows caused by changes in the growth of Gross Domestic Product (GDP / GDP), inflation, interest rates, budget and trade deficits or surpluses, merger and acquisition and other macroeconomic conditions. Major news is released publicly, so that many people can access the same news at the same time. However, the large banks have an important advantage that they can see 'order flow "currency from customers.

In the forex market (foreign exchange) is one can buy or sell currencies are traded. Objectively is to gain profit or advantage of the position that you are doing the transaction. Stock exchange in the technical term Lot and Pip. 1 Lot value is $ 100,000 and 1 pip value is $ 10. While the value of the dollar in the foreign exchange market is different from the value of the dollar as we know it in the banks. The value of the dollar in the forex market is very varied, 6000/8000 and 10,000 rupiah.