Wednesday, December 3, 2008

Who is broker in forex trading?

Forex, also known as the Forex Exchange Market (or the "FX" Market) is involved in the buying of currency while at the same time, selling of another currency. A broker is an agent who works in the role of an intermediary between the trader and the client. He or she is a shrewd negotiator when it comes to drawing up contracts for the sale of currencies. Broker Forex trading takes place in the Forex market which is the largest financial market in the world and boasts a daily turnover in the area of $1.2- 1.9 trillion USD.

The currencies utilized in broker Forex trading are always quoted and traded in pairs. The currency listed first is referred to as the base currency while the second one is known as the counter currency or quote currency. To use an example of broker Forex trading in pairs would be the US dollar traded with the Japanese yen (USD/JPY) or the Euro traded with the American dollar (EUR/USD).

It is in the wholesale market of broker Forex trading that currencies are referred to by using five important numbers and the last number (or placeholder) is given the name point or pip.

The broker Forex trading market has a great deal more buyers, sellers and daily volume turnover than does any other financial market on the globe. The Forex market is open 24-hours a day, six days a week with the first trading starting every day in Sydney, Australia. As the business day begins in other financial business sectors so does the trading. After Sydney, Singapore is next, then Tokyo, followed by London and New York City, which comprise the largest and most powerful financial centers in the world.

For example, at 5 PM on Sunday the broker Forex trading begins in both the cities of Sydney and Singapore, followed at 7 PM by Tokyo. Next to commence trading is the city of London, England at 2 AM and then New York City begins at 8 AM in the morning.

Forex is a unique market in that it makes it possible for it's investors to immediately respond to fluctuations in currency whatever their cause, be it an economic, political or social upheaval. Most importantly, whenever they take place. There is no waiting until the sun comes up to deal with a tenuous currency issue, it can be dealt with at 3 AM or 3 PM, whenever it is necessary. It is because of this that the currencies that are traded on a daily basis are not at risk of what is known as "after hours" reports and/or a loss in value.

The Forex market, with its hustle and bustle of broker Forex trading going on in high volume, has no specific physical address as stock markets do. It is instead called an "interbank" market or an "Over The Counter" (abbreviated as OTC) because all currency transactions take place either via telephone communication or by way of an electronic network.

Besides the advantage of being available 24 hours a day, the Forex market has other advantages. This market boasts the highest liquidity of any market in the entire world; large amounts of money are lessened due to its 100-to-1 leverage and more than sixty currencies allow for trading that is free of commission.

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