Forex Market Size Gives Profits To Forex Traders

Forex Market Size Gives Profits To Forex Traders

You must have often heard that the forex market is the most liquid market in the world. Liquid in the sense of frequent transactions (large transaction volumes) and no failed transactions. According to the records of the Bank for International Settlements, an institution that has members of 60 central banks whose country represents 95% of world GDP formation. Foreign exchange trading rose to an average of $ 5.3 trillion per day.

The foreign exchange market (forex market) consists mainly of institutional investors, corporations, governments, banks, and currency speculators. Approximately 90% of this volume is generated by currency speculators utilizing intraday price movements.

Unlike stock markets and futures contracts placed in the central physical exchange, the forex market is an over-the-counter market (OTC, not via the exchange), a truly decentralized electronics market.

Traders from other markets are interested in entering the forex market because of this very high level of liquidity. Liquidity is important because it allows traders to enter and exit the market easily 24 hours a day 5 days a week. This allows large volumes of transactions to reduce large price fluctuations, which are common in less liquid markets. That is, you will have difficulty when will get a position due to lack of buyers.

The level of liquidity of each pair will be different. Likewise with liquidity between trading sessions one to another trading session.

As the most heavily traded currency, the US dollar makes up 85% of Forex trading volume. In the second position is the euro followed by the yen in third position.

Most forex traders concentrate trading on these three currencies, the US dollar, the euro and the yen. In addition, the greater liquidity found in the Forex market is well suited for long-term trends and which responds well to technical analysis and charting methods.

The size of the Forex market makes it an ideal trading market. This liquidity makes it easier for traders to sell and buy currencies. This causes many traders from other markets to switch to the Forex market.

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