The Forex market is bigger than the bags of New York, London and Tokyo together

What is the Forex market?
The Forex market is an OTC (Over The Counter) ie a market whose products and procedures are not regulated by a single central body, with the actors that shape who set the rules and characteristics of products and exchanges are made.




Thus exchanges are made directly between market participants, there being a centralized clearing and settlement chamber. To understand this, suppose we want to buy shares of a company on the Spanish Continuous Market: our broker placed the purchase order in the SIBE (SIBE Spanish) in view of all market participants in their case can offer They are wishing counterpart.




The very system of the Spanish stock market is responsible for verifying that after the purchase order is the money needed to carry it out and that the seller owns the shares you want to sell, so that, should any incident occur, will Exchange itself that it is directly responsible to the parties (buyer and seller), making guarantor of all operations performed. In Forex, however, operations are performed directly between the parties so that the market is actually the sum of exchanges at the private level between the different stakeholders that comprise it.




The price of Forex



Referring to the contributions, although in a market of traditional values ​​such as the NYSE there is a single official listing for each of the products in the Forex market quotations are set in real time as a result of the prices at which the different including actors offered their assets. For example, the current value of the euro / dollar is actually the price at which the various players in the foreign exchange market are offering dollars and euros to each other, either through traditional exchanges such as the CME (Chicago Mercantile Exchange) or directly between them.




Currencies are traded on stock markets as both CME and private agents directly through the Forex markets, then, how is it possible to have a single price for each currency worldwide? Very simple: for arbitration: If a bank can buy dollars at another bank through Forex at a certain price, while buying in a market of traditional values ​​at a lower price, will buy in the traditional market and sell them to Forex through, driving up the price of dollars traditional market and lower the price of the dollar in Forex to reach equilibrium. Since these operations are automated actually almost always there is a single price for currencies worldwide for all asset traded in Forex.




The Forex market is huge and there are plenty of companies operating in it. Some companies offer mobile applications as this application iForex that puden be interesting for those who want to follow the Forex market.