Role of Forex

Forex or foreign exchange is over-the-counter trading market for trading currencies across world

. The forex determines relative values of various currencies. The main role of forex is to facilitate international trade and investment. It is done by converting one currency to another so that traders across world are able to make transactions. Forex is the largest trading market in the world and its participants include large banks, central banks, corporations, governments, currency speculators along with some other major financial institutions. This is the most liquid financial market in the world. As more and more people are joining this trade, the average volume of global forex is growing rapidly and continuously.

In a typical forex transaction, one party purchases a particular quantity of a currency and pays a particular quantity of another currency in exchange. In earlier forex markets, the rates for exchange remained fixed while in modern forex markets, there are floating exchange rates. The rates of exchange were fixed as per the Bretton Woods System and all counties followed it. But in modern foreign exchange market, rates of exchange are constantly fluctuating and a person purchasing a currency is required to pay the current rate of exchange prevalent at time of trading. The modern foreign exchange market began forming in 1970s when more and more countries started shifting to floating exchange rates.

There are some special features of forex that make it unique. The volume of trading in forex is very high and therefore high liquidity. This trade is dispersed across all geographical locations in the world. Forex operates for all 24 hours, except during weekends. The fluctuating rates of forex are a result of various factors. This is a market where the relative margin of profits is very low as compared to other markets that have fixed income.

Role of Forex

By: sedatdemir

POST COMMENT

Why Do All Forex Trading Systems Fail? Why Forex Robots Don't Operate and Can't Make You Prosperous? Currency Trading Basics For First Timers Honest And Neutral Forex Megadroid Review ForexYard review Are Forex Robots Really Worth It? Use Forex Robots for Trading Round The Clock Getting To Know the Forex Robots Trendline Forex Entry Signal Forex Signals Are The Best Exit Strategy In Trading! A Using of Forex Signal Generator Be A Forex Expert Learn About Today's Forex System