The Forex market is the biggest market in the world and is traded 24 hours a day, 6 days a week, and therefore one that is impossible to ignore.
The question is, is this the tail that’s wagging the dog? Is the forex market, ie the euro, dictating the trend in American and European equity markets? The answer is yes, for now.
You should look at the ETF FXE, the spot euro, and also the euro futures market at the Chicago Mercantile Exchange (CME), as they are all tradable.
The Forex Market is the largest market in the world, with trades amounting to more than USD 3 trillion every day. Most Forex trading is speculative with only a low percentage of market activity representing governments’ and companies’ fundamental currency conversion needs.
Unlike trading on the stock market, the Forex market is not conducted by a central exchange, but on the interbank market which is thought of as an OTC (over the counter) market. Trading takes place directly between the two counterparts necessary to make a trade, whether over the telephone or on electronic networks all over the world. The main centres for trading are Sydney, Tokyo, London, Frankfurt and New York. This worldwide distribution of trading centres means that the Forex market is a 24-hour market.
A currency trade is the simultaneous buying of one currency and selling of another one. The currency combination used in the trade is called a cross (for example, the euro/US dollar, or the GB pound/Japanese yen.). The most commonly traded currencies are the so-called “majors” – EURUSD, USDJPY, USDCHF and GBPUSD.
The most important Forex market is the spot market as it has the largest volume. The market is called the spot market because trades are settled immediately, or “on the spot”. In practice this means two banking days.
Stay tuned for a forex webinar next month in view of the great demand among the students of Ray Barros.
Idkit, Ag Moderator