Forex interbank market. The interbank foreign exchange market developed after the collapse of the Bretton Woods agreement and following the decision by U.S. President Richard Nixon to take the country off the gold standard in Currency rates of most of the large industrialized nations were allowed to float freely at that point, with only.

Forex interbank market

Capital Market: Evaluating First Week Performance Of Nigeria's FX Interbank Market Pt 2

Forex interbank market. The interbank foreign exchange market developed after the collapse of the Bretton Woods agreement and following the decision by U.S. President Richard Nixon to take the country off the gold standard in Currency rates of most of the large industrialized nations were allowed to float freely at that point, with only.

Forex interbank market


The largest forex trading volumes by far go through the network of professional forex dealers known collectively as the Interbank forex market. As the name implies, these Interbank dealers usually work for major forex market making banks, their forex brokers or their customers.

Despite not having a centralized exchange or much formal regulation, this huge currency trading market usually manages to function in an orderly way and provides enough liquidity for almost all commercial forex trades. As a result, those able to access the Interbank forex market tend to enjoy the best dealing spreads under most trading conditions, although some exceptions do apply such as after major economic data releases as the market digests the new information and adjusts exchange rates accordingly.

This over the counter or OTC network of forex traders and advisors has traditionally communicated via telephones and direct phone lines to other counterparties in the market. Also, forex brokers often communicate Interbank market prices and dealing activity in the most active currency pairs orally using voice broker boxes. Nevertheless, recent technologically advances have made electronic trading increasingly popular in the Interbank market. The professional Interbank forex market includes a variety of participants that trade foreign exchange for a number of different reasons.

These forex traders might include individuals working at major commercial banks, central banks, fund managers, international corporations, as well as high net worth individuals. Most of them either deal forex for hedging or speculative purposes like corporations and hedge funds respectively. Nevertheless, many large banks are market makers that provide liquidity to the market.

Also, central banks often adjust their currency reserves and intervene to stabilize their currencies. The advisor might call their client regularly with timely market commentary or sometimes even visit with the client in order to offer tailored hedging or trading strategy advice. Furthermore, despite being largely unregulated, the OTC forex market manages to maintain a substantial degree of liquidity as demonstrated by tight dealing spreads and the ability to absorb large transactions without much price movement.

This fact illustrates how people acting freely and in their own best interest can still provide an orderly market under most conditions. Fundamental analysis in forex trading. Learn more about the forex market in this simple and entertaining infographic. Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors.

The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you. Communication in the Interbank Market This over the counter or OTC network of forex traders and advisors has traditionally communicated via telephones and direct phone lines to other counterparties in the market.

Who Trades Forex in the Interbank Market and Why The professional Interbank forex market includes a variety of participants that trade foreign exchange for a number of different reasons. Other common reasons to trade forex include: The advisor might call their client regularly with timely market commentary or sometimes even visit with the client in order to offer tailored hedging or trading strategy advice Furthermore, despite being largely unregulated, the OTC forex market manages to maintain a substantial degree of liquidity as demonstrated by tight dealing spreads and the ability to absorb large transactions without much price movement.

Was this article helpful?


More...

993 994 995 996 997