What do you mean by the term FOREX?
Forex, Currency market or simply FX is another name for Foreign exchange market. Here, the trading of currencies can be done. It involves aspects of purchasing, selling and exchanging currencies at existing or determined prices.As long as trading market is concerned, it can be considered to be the world’s largest market.
Operations of foreign exchange market take place on various levels and work through numerous financial institutions. It is very important for the students to know the characteristics of Foreign exchange market; students can opt for Forex homework help online. Let’s discuss some of the important characteristics of Forex.
Characteristics of Foreign exchange market
Forex is considered unique as it has the following characteristics-
- The geographical dispersion;
- Huge trading volume;
- 24 hours working except the weekends;
- Factors affecting rate of exchange
- Low margins of profit as compared to other markets and
- To increase profit, leverage is used.
What is Spot market?
The place where currencies are bought and sold as per the current price is known as spot market. Such price is determined by the supply and demand as well as taking consideration of many things like interest rates, political situations, and future performance of a currency against the other and so on.
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Participants of the market
Forex is divided into many levels of access. Top level is aninter bank foreign exchange market which includes largest commercial banks and dealers who deal in securities. The participants of foreign exchange market are-
- Commercial companies- Companies take help from foreign exchange to pay for goods and services. These companies trade in smaller amounts which build short-term influence on rates of the market.
- Central banks- It plays a very significant role in foreign exchange markets. They control the price rise, supply of money and interest rates. Foreign exchange reserves are used by these banks to alleviate the market.
- Foreign exchange fixing- National banks of every country fix monetary exchange rate on a daily basis which is called foreign exchange fixing. It will then reflect the real value of equilibrium in the market. These rates are used by dealers, banks and traders as a market trend indicator. The procedure of fixing such rate is explained by our professionals who are experts in providing Forex assignment help.
- Investment management firms- these forms manages customer’s accounts like their pension funds and endowments by using foreign exchange market. These firms have specialists who are specialised in speculation. They manage currency exposures of their clients and earn profits.
- Retail foreign exchange traders-this can be said as a growing part of foreign exchange market as their participation is indirect. They participate through brokers or banks. The two types of retail foreign exchange brokers are- dealers and market makers. Brokers are the agents of the customers.
- Non-bank foreign exchange companies- these companies offer exchange of currencies and payment facility internationally to private companies and individuals.
- Money transfer companies and bureau de change- These companies provide remittance facility to the migrants. The four largest markets are- India, China, Philippines and Mexico.
These companies are generally can be spotted at airports, stations or at locations where tourists visit and facilitate exchange of currency physically from one currency to another. These companies access the Forex via banks or non-bank foreign exchange companies.
Students must have information in details regarding these participants of Forex. They can get it from online Forex assignment help.
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