The emergence of the Forex market is associated with 1971, when the first foreign exchange operation was carried out. At that time, it was not available to everyone, only in the early 1990s everyone had the opportunity to test their knowledge in the field of exchange trading on the Forex market . The first participants in the Forex market were large corporations, banks, funds and successful businessmen who could afford to “enter” the emerging market. This was due to the high entry threshold. The amounts reached several tens of millions of dollars. Naturally, not everyone had that kind of money. In the process of the development of the Forex market, and online trading, intermediaries began to appear, which, in order to attract participants to trade in currencies and securities, offered them loyal, very attractive conditions.
As a result, the structure of the modern Forex market is very diverse. There are both large participants with an investment portfolio of several million dollars and small private investors (individuals). It’s easy to become a trader today. Such an opportunity is available to anyone who wants to, if he sets a goal – to make a profit through trading currencies. All participants in the Forex market can be conditionally divided into two categories: those who “make” this market, and those who use the opportunities provided by this market.
The group “making” the Forex market includes commercial structures, banks, funds and other companies that daily make billions of dollars in currency exchange transactions for themselves and their clients. Such transactions can be both private, when the two parties themselves agree with each other, and concluded on electronic trading platforms (ECN), where a large number of large commercial banks prevail. Virtual trading makes the process of concluding transactions as easy as possible. A person who wants to buy places an order on the site, indicating the currency that he wants to buy, and the system automatically finds a seller for him – the bank that sells this currency, and vice versa.
Also, the first category of participants in the foreign exchange market includes the central banks of various countries. However, central banks, unlike commercial banks, which only pursue profit through currency trading, central banks are interested in maintaining the exchange rate of the national currency and maintaining the country’s economy in a healthy state.
As the main players in the Forex market, central and commercial banks not only actively shape the market, but also post their own quotes. That is why they are called market makers, that is, “making” the Forex market.
Individuals – small investors, international investment funds, exporters and importers of various products, who do not influence the formation of the market, but make the most of its opportunities, concluding transactions for the purchase / sale of various currencies, belong to the second group.
Trading on the Forex market does not stop for a minute, since the participants are representatives of different countries. That is, when it is night in one country, day is already coming in another, and therefore trade resumes. The activity of trading and the liquidity of individual currencies depend on the time of day. Depending on time zones, Forex trading is divided into European, Asia-Pacific and American trading sessions.
Opens the Asia-Pacific region Forex trading. Europe is still asleep at this time, and New Zealand, Australia, Japan, Hong Kong and Singapore are already actively concluding deals. It is not surprising that the greatest liquidity falls on the currency pairs of these countries. Europe is gradually joining Forex trading. At this moment, the pairs of European currencies become liquid, respectively. America completes the trading cycle. Therefore, the largest turnovers are reduced to the US dollar and the currencies of those countries with which America is actively trading. At the same time, significant changes in exchange rates are noted, as data on the state of the US economy are published. But it is the currency of this country that occupies the main positions in the world financial market and affects the change in the exchange rates of the currencies of other countries.