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Characteristics of Forex Market |
In recent years, the foreign exchange market could
favor more and more people, it becomes a favorite for the international
investors, and this is strongly related to the characteristics
of the Forex market. The main characteristics of the foreign exchange
market are:
1st, It consists market but no trading field
The finance industry in the western countries consist two sets
of systems, namely the centralism business central operation and
there is no fixed place for such business network. Stock trading
is being traded through stock exchange. Like the New York Stock
Exchange, the London stock market, the Tokyo stock market, respectively
is American, English, the Japanese stock main transaction place,
it is a centralism business financial commodity, its quoted price,
the transaction time and hand over to the procedure all consist
of unification the stipulation, and has established the same business
association, it has formulated the same business rules. The investor
could buy and sells the commodity through the broker company,
this is known as "consist of trading market and trading field".
But foreign exchange business is done without any unification
operation market and business network, it has no centralism unified
place like the stock transaction. But, the foreign currency trading
network actually is globally, and it has formed a organization
which has no formal organization, the market is relied through
an approval way and the advanced information system, Forex traders
do not consist any membership qualification for any organization,
but must obtain colleague’s trust and approval. This kind
of Forex market which has no trading field is known as "consist
of market but no trading field". Each day, the trading volume
in the global Forex market involves billions of U.S dollars, the
so huge large amount fund, is being control under both the non-centralism
place and non central governance system, plus it is settle based
on non-government governance.
2nd, Circulation work
Due to the different geographical position of the various financial
centre, the Asian market, the European market, the Americas market
because of the time difference relations, it has become an entire
day 24 hour continued operation whole world foreign exchange market.
Early morning 0830 (New York time) New York market opens, 0930
Chicago market opens, 1830 Sydney opens, 1930 Tokyo opens, 2030
Hong Kong, Singapore open, before dawn 1430 Frankfurt opens, 1530
o'clock London market opens. So 24 hours uninterrupted movements,
the foreign exchange market becomes a day and night market, only
on Saturday, Sunday as well as the various countries' significant
holiday, the foreign exchange market only then can close.
This kind of continued operation, provided no time and spatial
barrier ideal outlet for investors, the Forex trader may seek
the best opportunity to carry on the transaction. For instance,
Forex trader buys up the Japanese Yen in the morning at the New
York market, in the evening Hong Kong market opens the Japanese
Yen rises, the Forex trader sells in the Hong Kong market, no
matter Forex trader in where, he all may participate in any market,
any time business. Therefore, the foreign exchange market may
say is does not have the time and the spatial barrier market.
3rd, Zero and Game
In the stock market, the rise or the drop of stock market could
influence the value of the stock whether to rise or drop, for
example the Japanese new date iron stock price falls from 800
Japanese Yen to 400 Japanese Yen, the value of this stock has
been reduced to half. However, in the foreign exchange market,
the value of a stock and a currency is being calculated differently,
this is because the exchange rate is refers to the exchange ratio
both countries currency, the exchange rate change will influence
one kind of monetary value to reduce and at the same time another
kind of monetary value increase. For instance in 22 years ago,
1 US dollar exchanges 360 Japanese Yen, at present, 1 US dollar
exchanges 110 Japanese Yen, this explains the Japanese Yen currency
value rise, but US dollar currency value drops, in the end the
value will not reduce or increase. Therefore, some people described
the foreign currency trading is "zero and the game",
exactly said is the wealth shift.
In recent years, investment foreign exchange market fund has continuously
increased, the exchange rate fluctuation expands day by day, urges
the wealth shift to be larger, the daily trading volume of the
global foreign exchange involves 150 billion US dollars, the rise
or falls 1%, means that the 150 billion funds has been shifted.
Although the foreign exchange rate change is very big, but, any
kind of currency will not become waste paper, even if some kind
of currency unceasingly falls, however, but generally it represents
certain value, only if such currency has been abolished.
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