| Give a thought to this: what makes the forex | | | | markets in Asia close European markets open and |
| market so unique that none other like equities, | | | | when they close there is American market to take |
| commodities or even the bond market can match | | | | over. The next cycle begins with the Asian markets |
| either individually or all put together? I think everyone | | | | taking over from American markets. |
| who wishes to have a share worth his or her salt of | | | | 4. Largest daily turnover- over US Dollar 3 billion which |
| action in the forex market needs to know this. | | | | is ten times bigger than turnovers for all equity |
| The Unique Characteristics of Forex Market | | | | exchange markets put together. |
| Forex market allows trading in all major world | | | | Ponder the point number one again; London, New |
| currencies seamlessly. US Dollar, Euro, Japanese Yen | | | | York and Tokyo are the top trading markets with |
| and Great Britain Pounds are the few currencies that | | | | many smaller markets and countless banks and |
| account for over 80% of the daily forex trade. Now | | | | operators functioning across the globe in relativity |
| let's see what other features attribute to make this | | | | and interconnection to these big three. Thanks to the |
| so unique. | | | | continuous nature and 'over the counter' trading |
| 1. There is no single exchange market for trading | | | | facilitates quick decision making for traders without |
| foreign currencies yet all of them are so closely | | | | waiting for the markets to open the next day. |
| connected to each other ('over the counter' trading) | | | | 'Over the counter' trading also brings in the benefit of |
| that the differences in values can hardly be | | | | arbitrage (overnight differential interest) since there is |
| considerable, at least, for a retail trader. | | | | no single dollar rate over the world depending on |
| 2. There is no commission involved in the foreign | | | | significantly great number of factors that affect the |
| exchange trading although there is low transaction | | | | local Dollar demand and the local economy. Beginners |
| costs involved. One reason for this feature is you are | | | | need to understand the mechanics of economy that |
| trading currencies and not negotiable instruments | | | | play roles here. These factors include the GDP, |
| which are always virtual in nature at the point of | | | | budget, trade deficits, rate of interests and inflation |
| trade time. | | | | amongst other macro economic issues. |
| 3. Forex market has a continuous nature. Global time | | | | An interesting piece of information: regardless of |
| zones and universal nature of currencies have | | | | trends, US Dollar is involved in about 90% of |
| facilitated the continuous nature of this. When | | | | transactions. |