This is the largest financial market of its kind. A proper investment venture for many, Forex trading is a professional for many and an income for more. It’s common knowledge that this market transacts an average $5 trillion every single day. What not every single persons out there does not know however is that more than 50% of these transactions are bank trades. Banks are what make Forex 24 Hour Market.
Trading 24 Cross 7 Cross 365:
This is actually quite true to some extent. Traders rarely provide details about bank transactions. Point is, there’s always more than $2.5 trillion changing hands between one bank or the other. Another fact worth mentioning in this juncture, banks and similar financial insinuations earn nearly 50% of their profits from investing in Forex and profiting from it.
In short, they play a big part. There are 2 ways in which transactions happen in this market. Here’s elucidating them:
This has nothing to do any individual trader in the market. This is a transaction purely involving bank A and bank B. Explaining on this, considering that Bank A has $20 million and Bank B has 18 million in Euros in excess. Each of these requires either of the currencies. Obviously, they will partake in a transaction.
Now this transaction will take place as per the necessities of banks A and B. It will not have depend in any way on current market rates of exchange between those two currencies. These transactions however have profound effect on them market but coming to that later.
So, if Bank A wants to 10 million and Bank B wants $12 million, the deal will obviously go through. These are typical intra-bank transactions and these alone account for more than half the total daily transactions while also making a Forex 24 Hour market.
• Bank Investments through Clients
Bank’s also mediate between an individual who wants to invest in foreign exchange. Financial institutions quite often ask their clients to invest. They obviously take a nominal percentage of the profits which becomes a part of their earnings.
Every single bank has a foreign exchange department or section. This is complete with their own group of expert traders as well as brokers. Point worth mentioning, the client does not have any active participation in most cases. Some exceptions do follow where an account holder might ask the bank to forward an investment or open position on their behalf.
Universality of Foreign Exchange: Forex 24 Hours Market:
Japan’s national currency is Japanese Yen or JPY regulated by the Imperial Bank of Japan. For a bank dealing in JPY, it will trade most of the time in the Asian session. But that does not mean that bank is not going to partake in an USD transaction with, say, HSBC later.
Every bank from anywhere can partake in any transaction at any time with another bank. Cash or financial flow does not stop at one point, it continues. So is this Forex 24 Hour market.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.