Wednesday, January 16

Forex Market Size and Liquidity


Comparing the FX Market with other financial markets like NYSE, the forex market has NO physical address and NO central exchange.
The market is run electronically, within networks of banks, steadily for twenty-four hours, non-stop. It is there referred as an Over-the-Counter (OTC), or "Interbank", market.
This entails that the spot forex market is spread all over the globe with no central location.
You can participate on this business anywhere in the world, even at the top of Bua Mountain of the Kilimanjero.
The foreign exchange market is by far the biggest and most popular financial market in the world, traded by a large number of individuals and organizations.
In the OTC market, participants determine who they want to trade with depending on trading conditions, attractiveness of prices, and reputation of the trading counterpart.
The chart below shows the 8 most traded currencies with others included;




A glance at the chart above, the US Dollar is the most traded currency, taking up about 84.9% of all transactions.
It is seconded by the EURO representing 39.1%, while that the YEN comes third with 19.0%.
Without being told, most of the major currencies pairs are on top.
Are there mathematicians in the house?
You can see that the sum of the percentage share is 200% instead of 100%.
Don’t get confused!
This is because 2 currencies are involved in each transaction.
I hope you still remember Currency Pairs right?
We just need to clarify the air.

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