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FOREX Trading
Brokers
There are two types of retail
FOREX broker: brokers offering
speculative trading and brokers offering physical delivery i.e. the
bought currency is delivered to a bank account.
Retail forex brokers
or market makers handle a minute fraction of the total volume of
the foreign exchange market. According to CNN, one retail broker
estimates retail volume at $25–50 billion daily, which is about 2%
of the whole market. Retail traders (individuals) are a small
fraction of this market and may only participate indirectly
through brokers or banks, and might be subject to forex scams.
A forex introducing broker is a company referring
clients to FOREX brokers.
www.forextradeanalyst.com
A
forex dealer provides online
trading services to allow individuals to speculate on rapidly changing
foreign exchange rates.
Unlike a stock
market, where all participants have access to the same prices, the
forex market is divided into levels of access. At the top is the
inter-bank market, which is made up of the largest investment banking
firms. Within the inter-bank market, spreads, which are the difference
between the bid and ask prices, are razor sharp and usually
unavailable, and not known to players outside the inner circle. As you
descend the levels of access, the difference between the bid and ask
prices widens (from 0-1 pip to 1-2 pips for some currencies such as
the EUR).
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FOREX BOOKS AND ARTICLES
This is due to
volume. If a trader can guarantee large numbers of transactions for
large amounts, they can demand a smaller difference between the bid
and ask price, which is referred to as a better spread. The levels of
access that make up the forex market are determined by the size of the
“line” (the amount of money with which they are trading). The top-tier
inter-bank market accounts for 53% of all transactions.
After that there
are usually smaller investment banks, followed by large multi-national
corporations (which need to hedge risk and pay employees in different
countries), large hedge funds, and even some of the retail forex
market makers. According to Galati and Melvin, “Pension funds,
insurance companies, mutual funds, and other institutional investors
have played an increasingly important role in financial markets in
general, and in FX markets in particular, since the early 2000s.”
(2004) In addition, he notes, “Hedge funds have grown markedly over
the 2001–2004 period in terms of both number and overall size” Central
banks also participate in the forex market to align currencies to
their economic needs.
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How does forex trading work?
Many U.S. and international companies provide online trading
software and services for individuals (traders) who want to
speculate on the exchange rate differences between two currencies.
In doing so, these speculators buy or sell currencies with the
objective of making a profit when the value of the currencies
changes in their favor, whether those fluctuations derive from
market news, supply and demand principles, or geo-political events
taking place throughout the world. In addition, the forex market
is available to trade 24 hours a day, 5.5 days a week, so
customers can trade at nearly any time, not just when an exchange
is open.
The retail forex market has thrived since its
inception. The entrepreneurial members of the FXDC that began this
industry have continued to push each other and push the envelope,
expanding their reach to more than 140 countries to compete and
excel in the global marketplace. This very competition has
benefited individuals in service and value as market technology
rapidly evolves to provide traders with the latest equipment and
tools for online trading.
What’s more is that the leading forex companies have become global
leaders; the dominant players in the forex market are based in the
United States. These companies took the age-old process of
on-exchange trading and shaped it into something new. The
fast-paced nature of the industry has led to rapid innovations in
technology; customers can now monitor and trade the markets 24
hours a day while placing orders almost instantly with
sophisticated desktop trading software, from any computer via a
web browser, or even from their mobile phones.
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Facts About: |
FOREX Trading Brokers |
Forex
Introducing Broker | Regulated Forex Broker
The Forex Trade Analyst is written by a
Visual FoxPro Programmer. |
