Probably, there is no such person in the world who would not know about Forex. This is an international trading platform where the sale and purchase of foreign currency takes place. And unlike other markets, such as, for example, the New York Stock Exchange, the foreign exchange market has no physical location, and all work is done via the Internet. Due to this state of affairs, Forex is considered to be an over-the-counter or “interbank” market, because the operations carried out on it are backed up by a network of banks around the world. In addition, the electronic format of bidding allows you to maintain activity 24 hours a day, even in the most remote corners of the planet, where only there is the Internet.
To date, Forex is the largest and most popular financial market in the world, where every day a lot of private individuals and large investors conduct transactions. This course of things makes this trading platform the most highly liquid on the planet. Here, the participants of the trade themselves choose, with whom and under what conditions they want to trade.
- Dollar is the king in the Forex market
- Factors of influence of the US dollar on Forex
- Speculation in the Forex market
Dollar is the king in the Forex market
The National American currency is the most sold in the world, the second place belongs to the euro, the third place is the yen. We also need to pay attention to the fact that the US dollar is half of every major currency pair, and by “majors” 75% of all transactions are concluded – in a complex this indicates the incredible importance of the US dollar in currency trading.
According to the International Monetary Fund (IMF), approximately 62% of the world’s foreign exchange reserves are the US dollar. Accordingly, a huge number of investors, businesses and banks own the American currency, in connection with which they create a huge demand for the dollar, and form a proposal for substitutions.
Factors of influence of the US dollar on Forex
- The US economy is the largest in the world.
- The US political system is super-stable.
- The world’s reserve currency is the US currency
- In the United States are the largest and most liquid financial markets of the planet.
- The US dollar is a means of exchange for many cross-border transactions.
Speculation in the Forex market
An important characteristic of the Forex market is that, in addition to the main currency trade, speculative activity actively exists on it, the volumes of which are not inferior to the main work. In other words, almost 90% of the financial turnover on the currency market is formed due to traders working on the basis of intraday price movements.
The scale of the foreign exchange market influences the increase in the liquidity of the trading platform, from which it is clear that Forex is extremely highly liquid. For each investor, the level of liquidity plays an important role, since it determines the rate and probability of price changes for a certain period of time. In the forex market, the price varies depending on the currency pair and time of day.