The Players Of The Forex Market: Forex Trader

Forex market or foreign exchange market is also known as the currency market

. As the name suggests, this market deals with buying and selling of currencies of different countries around the world, where one currency acts as a base while the other acts as the counter or quote currency. By enabling currency conversion, it assists in international trade and investment. The market is very high in liquidity (dealing with trillions of dollars) and trading happens 24 hours a day across the world. The major currencies that are dealt with are US Dollars, Euros, Great Britain Pound, etc. The value of these currencies fluctuates due to various socio-political and economical situations. A little fluctuation can create ripples in the whole market that might have both positive and negative effect on the forex market and its players. So, it is very important to keep steady track of things.

The players of the forex market include big financial corporations like Deutsche Bank, Barclays Capital, HSBC, CITI, JP Morgan & Chase, Royal Bank of Scotland, etc. as well as small brokers. Together they are the forex traders. Their job is to buy undervalued currencies and sell overvalued currencies and incur profit in the process. The traders take wrong valuations of currencies to their advantage by carefully observing the factors which affect the economies and rate of exchange and earn profits.

Traders with strong decision-making skills, solid information base and best contact emerge victorious. They require a good presence of mind to act fast in order to take intricate financial decisions quickly and accurately so that they don't miss a golden opportunity. So it is important that they keep themselves abreast in the market and keep educating themselves with any latest updates they come across. A forex trader with sound knowledge in accounting benefits a lot as he can keep track of the financial position and the profit and loss position in quick times. In order to excel, a forex trader specializes in a particular currency along with that country's underlying economy, instead of trying to master them all, right from the beginning of his career. So, they specialize in groups of nations which are geographically related, for example Pacific Rim currencies, Central American currencies.

These traders are like professional gamblers who enjoy decentralized and unregulated market. The size of the market is growing, except for some developing countries which have capital controls and do not permit foreign exchange derivative products on their exchanges. The increase of this growth is because of increase in turnover, which is due to a number of factors like emergence of retail investors as an important segment of the market, high frequency trader's increased trading activity and its growing importance as an asset class. It is also due to the decrease in transaction cost, which is due to the introduction of electronic medium, which has made things fast and easy and hence allowing even the small traders to actively participate.

All in all, Forex market is like the ocean of never-ending opportunity, in which there is something for everyone, whether they are the big fish or the minnows of the industry. Proper planning and execution may lead to the growth of the forex trader as well as the market itself.

by: Micha lewi

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