Introduction To Forex Trading
Posted By : Rajat Kukrety | 28-Dec-2017
Forex Trading
Exchanges where currencies are traded at a common place is a foreign exchange market.Currencies are exchanges in order to make a foreign trade and business.If you are living in India and you want to buy Jalepenos from USA, either you or the company that buys jalepenos has to pay to US customer for it in INR.This means that US importer that is receiving you amount has to exchange the equivalent value ofINR in to US dollar.
The need to exchange currency is the main reason we have forex exchanges and its market is largest in most liquid financial market.The Stock Market. With an average traded value of around U.S. $2,000 billion per day(the Bank for International Settlements (BIS) reported that the forex market traded in excess of U.S. $4.9 trillion per day.)
Also for this international market there is no central marketplace for foreign exchange rather than currency trading is conducted Over The Counter (Traders around the world are connected via computer networks and all transactions are held over there rather than any central marketplace )
Types Of Market
Spot Market
This market is for financial instrument such as commodities or securities which are traded immediately or on the spot.In this market trades are conducted on spot prices It can be organised markets or exchanges or over-the-counter(OTC) market.
It is also reffered as PHYSICAL or CASH Market as it has immediate movement of orders ,made at current market price.Ex Crude Oil
Spot Price :- The current price of financial instrument or the price at which particular instrument can be sold or bought.
Spot Trade :- purchase of financial instrument that are made on spot or immediately.
Forward Market
This is over-the-counter which sets the price of financial instrument or asset for future delivery.It uses a range of instruments.It can also apply to markets for securities and interest rate as well as commodities.
Pricing:- This market has pricing on interest rate basis.The forward price is found out by interest rate diffferencial between two currencies between transaction date to the settlement date of the contract.
Future Market
It is an auction market in which user buys or sells commodity or future contract for delivery on specified future date.
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About Author
Rajat Kukrety
Rajat is a bright Lead Java developer with sound knowledge in JAVA, Spring Other than programming his area of interest are listening music and reading novels.