Read full article here...
As discussed before, like most markets, the forex essentially works because many participants are buying and selling a fairly uniform product. Currency contracts at the retail level are most often denominated in 100,000 or 10,000 units of the base currency in the pair. A few dealers will also break a lot into units smaller than that, but a full-size 100K or mini-size 10K lot is the most common.
Forex dealers can be classified as over-the-counter market makers. That means that when you are buying a currency pair, they are the seller. Likewise, when you are selling a currency pair, they are the buyer. The quotes you see on a trading platform are the prices the dealer is willing to buy or sell the currency contract for.
That seems pretty straight forward, but you may wonder how the prices offered by all the dealers are virtually identical if they (the dealers) are independent. That question causes a lot of confusion in the market, even for experienced traders. Oddly enough, the source of that confusion is, in some cases, the dealers themselves.
That’s why it’s vital to educate yourself on the dealing process, and to carefully investigate a dealer before opening an account.
To get a better idea how all this works behind the scenes, let’s take a look at forex market participants and how they relate to each other.
Read more about interbank forex trading
No comments:
Post a Comment