Nature Of The Currency Trading Market
The forex market is an over-the-counter market, meaning that there's no central exchange and clearing house where orders are matched. With different levels of access, currencies are traded in different market makers : The Inter-bank Market - Big commercial banks trade with one another thru the Electronic Brokerage System ( EBS ). Banks will make their quotes available in this market only to those banks with which they trade. This market isn't without delay accessible to retail merchants.
The web Market Maker - Retail merchants can access the FX market thru online market makers that trade essentially out of the US and the United Kingdom. These market makers often have a relationship with many banks on EBS, the bigger the trading volume of the market maker, the more relations it likely has. Market Hours Currency exchange is a market that trades actively so long as there are banks open in one of the major money centers of the Earth. This is effectively from the start of Mon.
morning in Tokyo till the afternoon of Fri. in NY. In details of GMT, the trading week happens from Sun. night till Fri. night, or approximately five days, twenty-four hours each day. Price Reporting Trading Volume Unlike plenty of other markets, there's no consolidated tape in Foreign exchange, and trading costs and volume are not reported. It is, indeed, probable for trades to occur at the same time at different costs between different parties in the market. Good pricing thru a market maker depends on that market maker being closely tied to the bigger market.
Pricing is generally comparatively close between market makers and the biggest difference between Foreign exchange and other markets is that there's no info on the volume which has been traded in any given point frame or at any given cost. Open interest and even volume on currency futures may be employed as a stand in, but they are by now way perfect.