Banks Are Playing a Triple Role In FOREX
They facilitate transactions between two parties, for example, companies that want to exchange the currency to pay the goods or services (consumer business). They speculate by buying and selling currencies. Banks take positions in currencies, believing that the currency will be worth more later (buy - long position) or less (sales - short position). International banks earn more than 70% of revenue in this market speculators trading (business speculator).
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George Soros is one of the world’s speculators. Central banks of various countries participating in the forex in order to serve the interests of their countries. When the central bank buys or sells foreign exchange, it wants to stabilize the domestic currency. FOREX is so large that not even the biggest central banks can not control, that is its strength significantly affect the movement of currency exchange rates.
Thus the daily turnover of U.S. bonds of 300 billion dollars of shares around the $ 100 billion, a turnover on the FOREX in more than 1900 billion dollars. The name of ‘market’ here is a little used incorrectly because there is no place to carry out transactions (such as for futures, stocks, bonds). Trade takes place more often over the phone or computer terminals at thousands of places in the world.
Most transactions take place between the 300 banks that carry out transactions for companies, governments or for yourself. One published prices (rates), bid for the purchase and ask for sales. Last price some of these banks is considered to be present, the latest market price for that currency.
There are numerous advantages for those who wish to trade in this market:
Liquidity - the forex in there is always a buyer or seller. Position is always over 24 hours or later can be closed (especially for ‘major’ currencies).
Access - Forex is open 24 hours a day, almost six days a week. The reason for the different time zone from Sydney to New York.
Two-way market - currency rates are listed in pairs, for example dollar / yen, dollar / franc, etc. Each position includes the sale / purchase of one currency and later buy / sell the same. What dealer do the first, depending on the plan (strategy) of trading, ie, if a trader thinks that the base currency to fall or rise in relation to the counter currency.
Leverage - Trading takes place in a certain amount of (lot, agreed on the size), mostly from $ 100,000. To begin to trade, to open the ‘margin account’ which will put the money as a guarantee for the trade. In this account included gains in trade or money with him off the losses in trade. Cover (leverage) trade is usually 1% or less 2%. This means that for trading by one lottery should have in your account the amount of $ 1000 (100x leverage).
Quality of execution - Forex is very liquid, and most transactions will be made in the latest market price. Protecting the security account is of paramount importance to the broker. It is very easy to withdraw your money from your account.
