Bangladesh violence spreads after Modi's visit, attacks on Hindu temples, train. In a universe with a single currency, there would be no foreign exchange FOREX , no foreign exchange rates, and no foreign exchange. But our world of mainly national currencies, the foreign exchange market plays the indispensable role of providing the essential machinery for making payments across borders, transferring funds and purchasing power from one currency to another, and determining that singularly important price, the exchange rate.
Over the past twenty-five years the way the market has performed those tasks has changed enormously. Since the early s, with increasing internationalization of financial transactions, the foreign exchange market has been profoundly transformed, not only in size but in coverage and mode of operations. A basic change in the international monetary system from the fixed exchange rate "par value" requirements of Bretton Woods that existed until to the flexible legal structure of today, in which nations can choose to float their exchange rates or to follow other exchange rate regimes and practices of their choice.
The foreign exchange market, commonly known as the FOREX market, is by far the largest and most liquid market in the world.
The foreign exchange market, is the backbone of all international capital transactions. It is the medium for how the world may view a nation's economic situation.
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Because of its size and reach, it is virtually impossible, even by government central banks to manipulate the FOREX market for any length of time. Unlike the equity markets, no effective insider interference is possible. The Interbank market is unique: - Transactions occur directly with other Interbank participants - Orders are processed immediately - Transaction participants are non-discretionary - Two-sided markets are offered to purchase and sell any currency at any time - Both short and long positions can easily be established The FOREX market is open 24 hours a day, nearly 6 days a week that does not depend on certain business hours of foreign exchanges; trade takes place among banks located in different corners of the globe.
Exchange rates are so flexible that significant changes happen quite frequently, which enables to make several transactions every day.
The following summarizes some of the many reasons why professional investors have flocked actively towards this market. You can work from anywhere in the world: Due to the fact that the market is available to every individual or corporate 24 hours a day, one can trade from anywhere in the world. With an Internet connection, and a laptop, computer or even WAP enabled cell phone you can trade easily with FOREX at your finger tips, with complete convenience of your home or office.
That's why this market is called a convenient market. The markets are open 24 hours a day: Around the clock trading gives traders the opportunity to trade within any time zone around the globe. It also gives traders the added flexibility of determining their trading day. Volume ensures that a trader can easily get rid of a position — if you want to buy, there will always be sellers and if you want to sell, there will always be buyers. Therefore, it is very easy to get rid of cash because everyone wants it, due to the vast number of investors in this market, and approximately 1.
Effective Execution: Orders are executed and confirmed online or manually via a recorded phone call. Customers can know the rate immediately at which the order is executed. Confirmed orders will always receive a single price execution. Limited Capital required to start and operate this business: Unlike most other businesses, currency trading does not need extra money to grow your investment or substitute your business with cash to expand your new plans.
You simply grow your investment or new plans by locking in profits from your trading account. Margin System: You can enjoy the benefits of leverage on contracts from ten to Five Hundred times of your margin deposit.
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As long as you are able to maintain your margin requirements on the full contract value, you can remain indefinitely in the market. Unlike futures or the stock market, there is never a lack of buyers or sellers.
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Therefore, it gives the investor the prerogative to open or close a position at will. Ease of Mind: There is no need to sit behind your computer for hours to keep track of your positions. You can simply put a stop loss or take profit order or even a buy or sell limit and let the system do the job for you.
Informative and Educative : The true value of education on trading is: if you ever lost money while trading in the markets, you know how to make it back. This means that knowledge and experience gives you the edge, income, confidence, clear trading strategies and much more. Lower Transaction Costs : Executing trades electronically reduces manual effort, thereby lowering the costs of doing business.
On-line brokers are then able to pass along the savings to their client base. It is vital for each client to have real-time information about their current position in order to make well-informed trading decisions. Full access to market information : Access to timely and relevant information is critical. Professional traders pay thousands of dollars each month for access to major information providers.
However the very nature of the internet affords users free access to reliable market information from a variety of sources, including real-time price quotes, international news, government-issued economic indicators and reports, as well as subjective information such as expert commentary and analysis, trader chat forums etc. Equal access to market information : Professional traders and analysts in the equity market have a definitive competitive advantage by virtue of the fact that they have first access to important corporate information, such as earning estimates and press releases, before it is released to the general public.
In contrast, in the FOREX market, pertinent information is equally accessible, ensuring that all market participants can take advantage of market-moving news as soon as it becomes available.
Profit potential in both rising and falling markets : In every open FOREX position, an investor is long in one currency and short the other. A short position is one in which the trader sells a currency in anticipation that it will depreciate. Forex is just an acronym for foreign exchange or currency trading and can be lucrative enough if you invest in it wisely. This global market has immense trading volumes with liquidity. While you can use the forex borderless prepaid card when you travel to foreign countries, you can also take part in forex trading to multiply your savings.
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More than futures or stocks, forex trading in India can offer you ample advantages. Let us take a look at these benefits:. Forex trading can let you control large amounts of money by putting up small amounts as margin only. This can help you frame a profitable investment strategy and reduce the risks involved. However, the margin balance should be checked regularly to avoid sudden liquidations of your positions in the market.
The ability of an asset to be converted into cash is termed as its liquidity. Forex can offer you the advantage of high liquidity, which means you can easily convert and move large amounts of foreign currency with minimal price discounts. High liquidity means huge sums of money can be invested and withdrawn without many hassles.