In terms of trading volume, this market is the largest trading market in the world.
Forex market works through financial institutions on several levels;
The main participants in this market are large international banks, and these banks are also resorting to traders or small financial firms who participate actively in large quantities financial exchange trading, such as insurance companies and others.
This market helps international investment and trading by enabling currency converter, as he assesses the value of currencies, trade speculation, based on the interest rate differential between the two currencies.
The foreign exchange market began after the founding of the Britton Woods system of monetary management rules of trade and financial relations among the major industrialized nations in the world after the Second World War;
Then countries gradually switched to floating exchange rates from the previous exchange rate regime, which has been fixed according to the Britton Woods system.
There are some unique characteristics of its kind for this market:
- Its huge trading size represents the largest category has led to increased liquidity in the world.
- Continuous operation 24 hours a day over five days a week.
- A variety of factors that affect exchange rates.
- Low margins of relative profit compared with other markets.
- Use guarantees to enhance profit margins and loss (the size of the account).
Currency is always activated in pairs (such as EURO / USD). And called on the first currency in the base currency and the second currency is called the counter currency (base / quote).
For example, if proceeded C $ 1,20 to buy US $ 1, the expression EURO / USD is equal to 1.2 / 1 or 1.2. The EURO is the base currency and almost be a quote or counter currency.