Yes! You keep hearing about those tips, software application and FX experts helping you out to build the finest forex strategy. But let me tell you one big secret! To making sure you have built the most solid forex strategy, you need to understand the forex market from the deeper core. This article helps you on that by explaining some twists and curves of forex market. Enjoy!
Why forex market is a two-tier model?
To illustrate, the first tier is about the wholesale mode – you might have heard of that under a different label – interbank market. And the second tier happens to be the retail/client market. There is however 5 groups of participants in FX market:
• International banks
• Bank customers
• Individual traders called “nonbank dealers”
• FX brokers
• Central banks
Nevertheless, it is the leviathan large international banks holding the heart of forex market. Banks worldwide (between 100 and 200) actively participate to “compose a market” international market of forex. Putting it the other way around, “they’re always on their toes” for buying or selling foreign currencies for their individual accounts. That is pretty much comparable to a specialist working hard on NYSE’s floor.
Those international banks dish up their retail clientele, large exporting/importing corporations, when it comes to foreign commerce. These banks as well help large corporations in making international investments on financial assets, which call for foreign exchange.
They have significant role to play on foreign bonds or foreign stocks. Other clientele of these large banks are MNCs, money managers, or non-bank dealers. It indeed is a huge world out there. Bank supported forex transactions amount to as much as 14% of the entire forex trading amount globally. Along those lines, the other part of trading quantity comes from Inter-bank traders – usually among international banks and/or nonbank dealers.
No wonder it’s called the biggest casino ever!
Nonbank dealers happen to be the largest non-bank/financial institutions like –
• Investment banks
• Mutual funds
• Pension funds
• Hedge funds
As you might understand, the size as well as frequency of underlying trades turns out to be super cost effective for all parties involved. And that is how they’ve been able to compose their separate dealing rooms for executing direct trades within inter-bank forex market.
Originally posted 2009-11-07 07:54:07. Republished by Old Post Promoter
Popularity: 57% [?]
Related posts:
- Forex strategies – The Big Picture The majority of the seasoned traders regard the FOREX market...
- Basic Forex Strategy Basic Forex Strategy ...
- Forex Strategy Mixing Currencies The Forex strategies are essential to the successof Forex...
- Strategy trade in Forex Trading online Malaysia Register Free Forex Trading Class at www.ForexTradingOnlineMalaysia.com … “forex...
- forex profit hunter – Forex Trading Strategy www.marketingreview.comli.com The Secret to Automatically Selecting Winning Trades &...
Related posts brought to you by Yet Another Related Posts Plugin.
