| Different Aspects of the Foreign Exchange Market |
 Currencies in the Foreign Exchange market are often traded by different market makers. The forex market is an over the counter market with no clearing house to equal orders and no central exchange. The market consists of two main segments: The Inter-Bank Market Segment Like its name suggests, the inter-bank market is inaccessible to retail traders. Banks make their quotes available only to other banks with whom they trade with. These large commercial banks mostly trade with each other through the Electronic Brokerage System (E.B.S). Online Market Makers Online market makers are the brokers who facilitate forex trade with retailers. They have pre-existing relationships with a couple of banks on the Electronic Brokerage System. The larger the market maker, the more relationships they are likely to have with banks. As a retailer you can access the forex market through these online market traders and get to share the spoils with them. Trading Period The market hours are in fact one of the major advantages of forex trading. This market is open for trading roughly five days of the week, twenty four hours per day. The forex market trades actively given there are banks open in one or two of the major financial centers of the world. Trade usually begins from Monday morning in Tokyo until late afternoon or night fall in the City of New York. Price Reporting Trading Volume Trading prices and volumes of forex are not usually reported in Forex Exchanges. This is because there is no consolidated ticker tape in the Forex Market, unlike in the Stocks and bonds market. There is always the possibility for trade to occur at different prices between different parties at the same time. Good prices can be found with a respectable market maker who is closely tied into the larger market with several banks. You will however find that prices are relatively close between market makers. The main difference from other markets is that there is no recorded data on the volume that has been traded at any given time frame, or at definite prices. You may glance at open Interest Values or volume on currency features to measure some of the activity in this shifting market. However there is no perfect means of ascertaining the true figures at any given time. Rollover Value When you trade in the forex market, it is vital that you become aware of the rollover concept. This is basically the process of extending the settlement date of an open position. You are supposed to receive the currency two days after the transaction date. By choosing to rollover the position, you simultaneously close your existing position at the days close rates, and re-enter the market the next trading day with new opening rates. Meaning you artificially extend the settlement period of your earnings by a day. The rollover concept is often referred to as “tomorrow next” by forex exchange dealers. |
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