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Foreign Exchange Markets

Written by ForexCult Team
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Foreign Exchange Markets There are a couple of names that the foreign exchange markets actually go by. They can be called currency markets, forex markets, or FX markets as well. These markets are known to exist in a place where one currency is actually traded for another type of currency. As you will learn from this article and from many other resources, the foreign exchange markets are known to be the largest markets in the whole entire world. This is based on actual cash values of trades. The trades consist of the trading that takes place between well known banks that are found to be relatively large as well as central banks. The trades are also based on the speculators of currency as well as the corporations that are multinational companies. You can also base these trades on the governments of countries all over the world as well as other markets of finances as well as institutions. Foreign Exchange Markets and What’s Going On In case you are unaware of just how much the foreign exchange markets are worth, you are looking at a market that averages around one point nine trillion dollars a day on the average. You can really see the big picture when you take into consideration that these foreign exchange markets are taking place all around the globe, there are many different countries and many different people that participate in these markets and that is what makes this market such a success. Right now as we speak the retail traders make up what is known as a small amount of the foreign exchange markets and they are only able to actually participate in the markets if they go through brokers or banks indirectly and there are many times that these retail traders are often target of foreign exchange markets scams. Based on the fact that there are so many legitimate brokers out there, there are also a lot of scam brokers out there as well and if you are a retail investor and you are a beginner in the market, you may have a rough time telling the two apart. Foreign Exchange Markets and the Market Size There are many reasons that the foreign exchange markets are so unique and in the following paragraph, I am going to take the time to let you know a couple of those reasons so that you will know what actually draws all these different people as well as companies to these markets and what makes it such a wonderful trading experience. The first thing that makes the foreign exchange markets unique is the actual trading volume of the markets. The second reason that these markets are so unique is because of the fact that these markets are often found to be the most liquid. The third reason that these markets are so genuine is because the market is made up of a large amount of traders. There are people located all around the world as well as companies that take part in this market. The fourth reason that this market is so wonderful is because of the fact of its actual geographical dispersion. The fifth reason that this market is so unique is because of the long trading hours that the traders can actually trade which runs twenty four hours except on the days of the weekend. The last reason and also the sixth reason that the market is so reasonable are because of the fact that there are a number of factory that actually affect the exchange rates. Foreign Exchange Markets and Market Participants In the stock market you will find that all of the traders that trade in the market all have access to the same prices. Basically, that is why the stock market differs from the foreign exchange markets, because in the forex markets you will find that there are different levels in which the traders have access. It all depends on what level you are on what prices you will get. You will find that the highest level is known as the interbank market. The interbank market is made up of investment banking firms that are among the largest in the world. It is in this level that you will see that the spreads are razor sharp and are commonly only available to those people that are within the inner circle. Traders that are out of the inner circle are not aware of these spreads. You will notice as you take a step down the ladder that the actual difference between the spread widens.