2015

August 2015

Posted by Anton Murray Consulting on . Posted in 2015

Focus On: Foreign Exchange

Foreign Exchange, also known as Forex or FX, is the exchange of one currency for another on the foreign exchange market. FX helps facilitate foreign trade and business and even affects your overseas holidays and purchases. The forex market is bigger than the stock exchange. In fact it’s the largest financial market in the world.

Currency trading is done OTC, or over the counter, meaning that all transactions are done electronically between computers right around the globe, 24 hours a day. Once trading is finished in the US, it begins in Asia. There is no central marketplace like the stock exchange for FX trading.

The price of one currency is set against the price of another, with over US $4tr changing hands each day. Factors such as global economics, policy and politics can affect the performance of different currencies, and essentially traders want to capitalise on this fluctuation by speculating on their rise or fall in the future.

There are three ways of trading on the FX market. The spot market is where currencies are bought and sold according to the current market price. The forwards market trades in contracts and exchanges currencies in the future, rather than straight away, at a price agreed upon when the contract is made. And futures trading also trades in contracts but speculates on the future performance of commodities.

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