Unlike market financing as market major stock New York Stock Exchange, the foreign exchange spot market (spot forex) is not a central location or a transaction .
The Forex market is considered the unofficial market (Over The Counter), or also known as the interbank (Interbank), due to the fact that the entire market electronic systems, the network of banks, continuously activities in 24/24 hours.
This means that foreign exchange spot market spread worldwide and there is no central location. transactions can take place anywhere, and anytime.
Forex market is the OTC market financing the largest and most popular in the world, traded globally by a large number of individuals and organizations.
On the OTC market, the transaction may decide they traded with someone depending on trading conditions, attractive rates, and reputation of the trading partners
chart below shows the ten currencies Affairs most.
The dollar is the most traded currency, accounting for 84.9% of all transactions. The euro stood 2nd with 39.1%, while the yen is in third with 19.0%. As you can see, most of the major currencies occupy the top spot on this list!
* Because two currencies and take part in each transaction , the total percentage of the coins individually is 200% rather than 100%
The chart above shows how often the U.S. dollar traded in the forex trading market. 84.9% of all reported transactions are located along one side of the dollar.
Dollar is King
Maybe you saw that we often refer to the dollar. If dollars is half of all the major currency pairs (majors), the pair accounted for 75% of all transactions, so we must always pay attention to the dollar. USD is king!
In fact, according to the International Monetary Fund (IMF), the dollar accounted for approximately 62% of foreign exchange reserves of the world! Because most investors, business, and the central bank have it, they pay attention to the dollar.
There are also several other important reasons why the dollar plays a central role in the foreign exchange market:
America's economy is the largest economy in the world,
The dollar is the reserve currency of the world.
American markets account and bar the biggest accounts the most powerful in the world.
America has a super political system stability
America is a military superpower of the world.
The U.S. dollar is the medium of exchange for most international transactions. For example, oil is priced in U.S. dollars. So, if Mexico wants to buy oil from Saudi Arabia, it can only be purchased in U.S. dollars. If Mexico does not have the dollars, they are forced to sell and buy the dollar peso.
SpeculationOne important thing to note about the forex market, while trade and finance is a part of trading volume, most currency trading is based on speculation. In other words, most of the trading volume comes from investors to buy and sell based on intraday price volatility.
Trading volume was brought back from the speculators is estimated to be over 90%!
The proportionality of speculative foreign exchange market is the liquidity account is very high (total volume of buying and selling buying happening at any given moment).
This makes it very easy for anyone to buy and sell currencies.
From the perspective of an investor, liquidation account is important because it determines how prices may change in a given time. An environmentally sound market accounts as well as forex trading allows large volumes only create a small impact on the price movement.
