Forex market is a place for both fortunes and misfortunes. The market demands that the forex dealers are very thoughtful and spontaneous. The possibility of making losses is far more than making profits. The mechanics of trading are very intricate and every dealer should constantly follow the market trends and ensure that he is not building up excessive positions. The RBI as well as FEDAI have imposed certain rules for the traders to prevent them from engaging in speculations. To know the intricacies of forex dealing, read on
Precisely, the
foreign exchange market is an inter-bank or inter-dealer market. It is an over-the-counter
market, where transactions are conducted between any two parties that agree
to trade via the telephone or electronic network. Trading is not centralized,
as in the case of stock markets or currency futures or currency options markets,
which trade on special exchanges. This particular feature of the foreign exchange
market facilitates it to operate on a 24-hour basis, moving from one time zone
to another, across each of the world's major financial centers every day. Because
of heavy volumes in trading, it is virtually not possible for individuals or
companies to influence the exchange rates. In fact, even central banks and governments
find it difficult to control the direction of the most liquid currencies.
The manner in which
the forex market is organized offers a high potential to earn money, provided
the right decision is made (but remember! none can guarantee it). One wrong
move at the same time may prove to be very costly. Dealing in a forex market
is the most complicated job. Mostly commercial banks deal in the market, for
the reason that, being large in size can absorb losses to some extent. |
