Unlike a stock market, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest commercial banks and securities dealers. Within the inter-bank market, spreads, which are the difference between the bid and ask prices,and they are razor sharp and not known to players outside the inner circle.
Forex Market Participants
The difference between the bid and ask prices widens as we go down the levels of access. The Forex market is the international foreign exchange interbank market that is traded 24 hours per day, 5 days per week. It gets its name from the English shortening foreign exchange to the name forex. The interbank forex market is one of the youngest financial markets and the largest financial in the world operating since the 1970′s after US President Nixon took the USA off the gold standard. Forex market participants are generally classified as follows. Investors investing long-term, speculators trading short to intermediate term, and traders trading on a daily to weekly basis. Market participants are most interested in the most common, most liquid currencies which are called the major currencies.
At the moment, more than 85% of all forex trades involve the basic major currencies which include the US dollar, the Japanese yen , the Euro , the British pound , the Swiss franc , the Canadian dollar and the Australian dollar. The distinctive feature of the foreign exchange market is its stability. It is a well-known fact that the main threat for any financial market is a possible financial crisis meltdown, and or the fall of the global financial markets. However, unlike other markets of the stock and commodity markets, forex is defended owing to the specific markets of global currencies. If shares devalue it is a financial collapse.
If the dollar falls, this means that another currency has become stronger, and the market movement becomes more active. This is a good chance to generate profit for a forex trader. The unique stability of the forex market lies in this forex market peculiarity. Currency is one of the most liquid and reliable trading instruments in the financial markets. Forex trading is available anywhere to anyone through online access.
With the internet, you may trade forex 24 hours a day, 5 days per week with others who are in the another part of the world. As it was mentioned above, exchange market always gives you an opportunity to make profit. Meaning currency rate fluctuations are taking place most of the time several times a day. Fluctuations of the currency rates, with your trading skill, and new financial trading technologies allow you to potentially build a high profitable business right now.