What is the forex marketing? And what forms does the forex marketing have?
2020-01-12 18:21 from：CAPSTONE author：Jack
The forex marketing refers to a trading place engaged in forex trading, or a place where various currencies are exchanged with each other. The forex marketing is now the world's largest financial market, with a daily trading volume of about $ 2 trillion, while the New York Stock Exchange's daily trading volume is only $ 25 billion. The daily trading volume of the forex marketing is more than three times the total daily trading volume of the securities and futures market.
Organization form of forex marketing
forex marketings in different countries have different forex trading methods due to their long-term financial traditions and business habits. There are two main forms of traditional forex marketing organization: counter market and exchange.
The over-the-counter market method does not have a certain opening and closing time, and there is no specific trading place. The two parties of the transaction do not have to deal face to face, and only rely on telex, telegram, telephone and other communication equipment to contact and contact each other to negotiate a deal. The forex marketings of the United Kingdom, the United States, Canada, Switzerland and other countries have adopted this way of organizing over-the-counter markets. Therefore, this method is also called the British-American system.
The exchange method has fixed trading venues, such as foreign exchange exchanges in Germany, France, the Netherlands, Italy and other countries. These foreign exchange transactions have all fixed business days and opening and closing times. Participants in foreign exchange transactions stipulate on each business day. Business hours are concentrated on the exchange for trading. Because countries in continental Europe use this method to organize the forex marketing, this method is also called the continental system.
Over-the-counter trading is the main organization of the forex marketing. This is not only because the two largest forex marketings in the world-the London forex marketing and the New York forex marketing-are organized and operated in this way, but also because foreign exchange transactions are international in nature. Because the participants of foreign exchange transactions come from different countries, the transaction scope is extremely wide, and the transaction methods are becoming increasingly complex. The cost of participating in exchange transactions is obviously higher than the cost of transactions through modern communication facilities. Therefore, even in continental European countries, most of their local foreign exchange transactions and all international transactions are conducted over the counter. The exchange market usually handles only a small number of local spot transactions.
2. Participants in the forex marketing
From the perspective of the main body of foreign exchange transactions, the forex marketing is mainly composed of the following participants:
(1) The Central Bank. The main purpose of the central bank's participation in the forex marketing is to maintain exchange rate stability and rationally adjust the amount of foreign exchange reserves. It directly participates in forex marketing transactions to adjust the supply and demand relationship of forex marketing funds to maintain the exchange rate at a certain level or to limit it to a certain level. The central bank usually sets up a foreign exchange stabilization fund. When the market demands excessive foreign exchange and the exchange rate falls, it sells foreign currencies and recovers the local currency. When the market exceeds the supply of foreign exchange and the exchange rate rises, it buys foreign currencies and puts them in local currencies. Therefore, in a sense, the central bank is not only a participant in the forex marketing, but also the actual manipulator of the forex marketing.
(2) Foreign exchange banks. Foreign exchange banks are banks designated or authorized by foreign central banks or monetary authorities to operate foreign exchange businesses. Foreign exchange banks are usually commercial banks, which can be domestic banks that specialize in foreign exchange, domestic banks that also run foreign exchange business, or branches of foreign banks in the country. Foreign exchange banks are the most important participants in the forex marketing, and their foreign exchange transactions constitute a major part of forex marketing activities.
(3) Foreign exchange dealers. A foreign exchange dealer refers to a trading company or individual engaged in forex trading. Foreign exchange dealers use their own funds to buy and sell foreign exchange and obtain the bid-ask spread from it. Most foreign exchange dealers are trust companies, banks and other forex trading institutions. There are also companies and individuals specializing in this kind of business.
(4) Forex broker. Foreign exchange brokerage refers to the intermediary who facilitates foreign exchange transactions. It lies between the foreign exchange bank and other participants in the forex marketing and negotiates foreign exchange transactions on behalf of them. It does not trade foreign exchange itself, but merely connects buyers and sellers of foreign exchange, facilitates transactions, and receives commissions from them. Foreign exchange brokers must be approved by the central bank of the host country in order to operate.
(5) Foreign exchange speculators. Foreign exchange speculation by foreign exchange speculators is not based on the actual needs of international payments. Instead, it uses various financial instruments to pay a certain amount of margin in exchange rate changes for pre-buying and pre-selling to earn exchange rate differences.
(6) Actual foreign exchange suppliers and actual demanders. The actual suppliers and actual demanders of foreign exchange in the forex marketing are those individuals or companies that use the forex marketing to complete international trade or investment transactions. They include: importers, exporters, international investors, multinational companies and tourists.
3. Major forex trading centers
Currently, there are about 30 major forex trading centers in the world, which are located in different countries and regions on all continents. Among them, the most important are London, Frankfurt, Zurich and Paris in Europe, New York and Los Angeles in the Americas, Sydney in Oceania, Tokyo, Singapore and Hong Kong in China.
Each market has its own unique characteristics, but all markets have similarities. Markets are separated by distance and time. They are sensitive to each other and independent of each other. After a center is open every day, it passes orders to other centers, sometimes setting the tone for the opening of the next market. These forex marketings are centered on their cities and radiate to other countries and regions around them. Due to their different time zones, each forex marketing opens and closes during business hours. They are connected to each other through advanced communication equipment and computer networks. Market participants can trade around the world, and foreign exchange flows smoothly. The exchange rate differences between markets are extremely small, forming a unified international forex marketing that operates globally and operates around the clock.
The forex market alternates with the direct route of the sun, so you can trade at night or choose to trade in the morning. This undoubtedly facilitates two very different types of traders, the Owl and the Lark. However, you need to be reminded that traders in the morning may not be able to catch the wave of turbulence in the market one day. It is likely that you have become the prey of other traders. These traders are usually always richer.
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