Trading Spot Forex
Trading Spot FOREX,the largest trading market, across the globe, is recognized as the foreign exchange system. The daily turnover of this financial market is above $4 trillion.
The purest and oldest currency exchanging trading mechanism in the world is known as trading spot FOREX. This mechanism allows participants/traders trading actual bank notes in FOREX market against one another, oftentimes with unobtainable degree of leverage which isn’t available in any other market. Global financial exchange system or Global FOREX was created in 1944 in result of Breton Woods Agreement.
This agreement was signed between victorious powers of World War II that laid down currently renowned over-the-counter, highly automated and heavily computerized Spot foreign exchange market. FOREX has bonded almost every independent country on the world map in this financial market, along with millions of individual investors/traders and thousands of corporations.
Like Federal Reserve Bank
Trading FOREX involves institutions like Federal Reserve Bank, European Central Bank, hedge funds, broker/dealers, large financial institutions and small-time retail traders as the main players.
Low transaction costs actually resulted in the involvement of individual traders in the FOREX market through online brokerage firms. Internet revolution has made playing in currency exchange market very easy.
A Spot FOREX pair is created in FOREX exchange system when one currency is matched by an investor against another foreign currency--for example, USD/JPY. When dollars are purchased in this example, equivalent number of yen is simultaneously sold for immediate delivery to dealer/broker.
Large-scale printing and borrowing
Brokers/dealers offer individual investors opportunity of making bets 50 to 100 times than their collateral for a trade. That’s why Spot FOREX trading is very popular among traders. There’s great potential in Spot FOREX market to expand in near future because of large-scale printing and borrowing currency by the industrialized countries to deficit spending.
Learning and understanding FOREX spot market is necessary before diving into this huge financial market to grab your share of profit. Books, written by some most successful traders, can be beneficial as a starting point.
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