What Makes The Forex Trading Market

Trading on the forex market differs fundamentally from the equities and derivatives trading. It is only over the counter rather than on specialized platforms forex broker. The main features are the huge liquidity, virtually uninterrupted trading activity, the low cost and large, integrated trading platforms in the financial leverage.

On the forex market every day around 1.6 trillion U.S. dollars are converted. The forex market is the mirror image of the world trade, which is growing rapidly due to globalization and the consequent greater integration of the global economy. The actors in the foreign exchange market are therefore among the very large world of finance: Internationally active banks, insurance companies, institutions like the IMF and World Bank, and - most importantly - the central banks of the world acting in direct contact with each other. Foreign currencies can be traded throughout the world. By the time investors shift the forex market is, therefore, six days a week open around the clock.

Measured in Central European Time on Sunday evening trading begins and ends in the night from Friday to Saturday. In between there are no breaks, so that no problems occur with gaps (ie, price gaps between trading periods) as they are known in the stock trading. Forex trading is very inexpensive.

The market makers require their customers usually no fees or commissions. They make their money exclusively with the bid-ask spread, which lies between the buying and selling rates on the platform. This amounts to the major currency pairs - about EUR / USD - an average of two so-called pips. Price changes are measured in pips in the forex market. The exchange rate in the Forex market can be represented with four digits after the decimal point. A pip is equivalent to a change of one unit on the fourth decimal place. Another typical characteristic is the financial leverage that allows small investors to move large positions in the currency market, without taking out a loan and to take existential risks.