The Foreign Exchange Market is an over-the-counter (OTC) market, which means that there's no central exchange and clearing house where orders are matched. With different levels of access, currencies are traded in various market makers:
The Inter-bank Market - Large commercial banks trade with each other through the Electronic Brokerage System (EBS). Banks can make their quotes available in this market only to those banks with which they trade. This market is not directly obtainable to retail traders.
The Online Market Maker - Retail traders can access the FX market through online market makers that trade primarily from the US and the UK. These market makers typically have a relationship with several banks on EBS; the larger the trading amount of the market maker, the more relationships it likely has.
Market Hours
Forex is a market that trades actively as long as there are banks open in among the major financial centers of the world. This is effectively from the beginning of Monday morning in Tokyo until the afternoon of Friday in Ny. In terms of GMT, the trading week occurs from Sunday night until Friday night, or roughly 5 days, 24 hours daily.
Price Reporting Trading Volume
Basic Concepts III: History and Recent Trend of Online FX Market
The recently technology advancement has divided the barriers that used to stand between retail clients of FX market and the inter-bank market. The online forex trading revolution was originated from the late 90's, which opened its doors to retail clients by connecting the market makers to the end users. Using the high-speed Internet access and powerful central processing unit, the online trading platform at home user's personal computer now serves like a gateway to the liquid FX market. Retail clients can now trade together with the biggest banks in the world, along with similar pricing and execution. What used to be a game dominated and controlled by major inter-banks is becoming a common field where individuals may take the same opportunities as big banks do.
Technology breakthroughs not only changed the accessibility of the FX market, they also changed the way in which of how trading decisions were made. Research showed that, as opposed to unable to find profitable trading methodologies, the primary reason for failure as a speculator is deficiencies in discipline devoted to successful trading and risk management. The development of iron discipline is among the most challenging endeavors in order to which a trader can aspire. With the help of modern trading or charting softwares, traders can now develop trading systems which are comprehensive, with detailed trading plans including rules of entry, exit, and risk management model. Furthermore, traders can do backtesting and forward testing of the particular strategy on a demo account before commitment of capital.
When the system trading softwares were first introduced into the actual store of trading tools, traders would need programming skills and a strong background in mathematical technical analysis. With the work of system trading software companies making their products more adaptable to mass market, the system trading softwares are now more user-friendly and better to use. At this point, non-programmers with basic understanding of mathematical technical analysis can enjoy the amusement of system trading.
While system trading may not provide the 'holy grails' of trading, it offers as prototypes or guidelines for beginners to starting trading with sound numerical model and risk management. Over time, traders can develop trading systems that match their individual personality.
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