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Forex Stats and what you should know!

Forex Stats – What You Should Know About Forex

Forex is a unique market for many reasons. Just a couple of examples are the fact that it isn’t centralized (trading takes place across the entire world) and that trading takes place all day, every day apart from a few hours on the weekend. Another reason Forex is unique is its size. There is many times more money being traded on Forex each than on any other financial market in the world. This is partly for the reasons already mentioned and partly because of other, more complex factors.

In numerical terms, Forex trades around 4 trillion US dollars every day of the year. Even at the weekend thousands if not millions of Forex trades are being carried out instantly, so market traders can react almost instantly to any changes in the world.

The Forex market is known as an extremely liquid market. In fact, it is widely considered the most liquid market in the world. This means that Forex trades and assets can be sold very rapidly and without losing much of the value, which is another reason why it is so attractive to the many traders worldwide.

Of the $4 trillion traded each day, around 3.2 trillion is traded in the main Forex markets. The biggest types of exchange in terms of value are Forex swaps and spot transactions. These make up over half of the total daily turnover of the Forex market, and make up the bulk of all the market trades. A brief explanation of these two exchange types are given below. It should be noted that there are many other types of trades.

Spot Transaction – This is when a trader buys one currency using a different currency in an immediate transaction. Usually this takes place over two days, and is a direct transfer between two different currencies.

Forex Swap – This is when a spot transaction and a forward transaction are completed at the same time. When a swap takes place, currency is exchanged between two participants for a certain length of time, with both sides agreeing that at the end of this period the currency will be exchanged back.

The Forex market has many major players who trade a large percentage of the total volume. However, this doesn’t mean that smaller private traders can’t also make money.  In fact this is far from the truth. The big Forex traders are usually international banks and other financial institutions. To illustrate just how much of the total volume these major players have, the top 10 currency traders make up nearly 80% of the total volume. These include the Deutsche bank, Barclays Capital, JPMorgan and HSBC.

Another interesting stat about Forex is that while potentially any currency can be exchanged, in reality very few are regularly. For example, trades in the US dollar make up a massive 86.3% of daily trades. The nearest competitors are the Euro, Japanese Yen and Great British Pound. Other than the top ten currencies very few are actually traded, despite the fact that there are many different currencies worldwide.

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