The composition of the Forex market and other major currencies

Forex market is from other financial markets, two of two things, one is that it is not used as a vehicle has traditionally been financial. He was and still - to some extent - the goal of a more utilitarian. In today's globalized economy, the majority of the work a kind of global presence, which creates the need to replace one currency for another in order to complete transactions.
For example, the Honda manufacture cars in Japan and exported to the United States of America, where the American consumer has replaced Dolarath to buy a new Honda car. Must return some of the money to Japan to pay for factory workers who manufacture the car, but must first convert these dollars into Japanese yen, because this is the currency in which workers receive the wages of factories in Japan. Is the conduct of such transactions by international banks and are made by a mechanism known as the "foreign exchange market" or "Forex".Since the banks used to conduct international transactions such as these, it is natural to ask for fees for the service. These payments come in the form of the spread bet / ask - where they are required to buy the currency at slightly less than the asking price, and keep the difference. When taking into consideration that more than $ 3 billion are moved every day in the Forex markets, these seemingly small fees that may coalesce into large sums.
Since the seventies of the last century, most major currencies in the world are going (mostly) on the way the exchange of free-floating, allowing the currency to be determined based on market forces, which are the supply and demand. We say "mostly" because there were some times in which the some of the central banks of some countries to intervene in the market to manipulate currency exchange rates through their buying or selling large amounts of currencies of their countries, but natural that such things happen only in cases the maximum. There are also other central banks choose to manage their currencies in a more stringent, however, that such banks are a minority in the modern world. Therefore, in most cases, the way in the free-floating exchange allows the volatile currencies against each other more, and this opened the door to the outlook for future price movement of currencies. Strong knowledge of the Forex markets, banks, and the large level of capital available to them, enabling them to be the first to speculate in the Forex market, and increase their profits significantly in this way. However, the consequences of non-welcome to this Aldharbat the lack of liquidity in some cases, and not being able to complete certain transactions necessary.
In order to resolve this problem, banks have increased the number of participants in the market by including non-bank entities, and thus get a large influx (the distribution of liquidity) in order to complete customer transactions, and also to profit from new participants and non-experts in the market . One of the traders in the Forex inexperienced in the beginning the large cash funds (such as the famous Quantum Fund), and include, but today even the local forex broker.
Other unique feature of the Forex market is that market directly "above the table," meaning that there is no central initiative (such as the stock market) are the transactions. Instead, transactions are first class in the "interbank market", which is a collection of the largest central banks in the financial world, which is available to all of them currency trading with each other to agree upon the price. It may be difficult to know the way in this maze large, so the smart people in the banks leading the development of "electronic brokerage system" EBS, to allow participants to see the other prices accepted by the other traders. As has been the development of a competitive system by "Reuters" (D2). Today is a preference one over the other often depending on the currency pair that you want to trade him, as the EBS usually used in pairs with the EUR / USD, USD / JPY, USD / CHF, EUR / CHF. While using "Reuters de 2" for all other currency pairs. In 2006 acquired the ICAP EBS. Be aware that while the combination of these services provide a centralized price information, they do not constitute a centralized exchange. And still market Forex Market "on the table" significantly.
The second layer of the market made up of smaller parts of large global institutions. Such that the bank branch in the United States to deal with another branch of the same bank in Japan, for example. When going to the local bank branch and request the transfer of currency, they will Ikdon you a price equal to the rate, the banks are not exactly intermediate. And you can search for better prices, and may be considered prudent to do so, as prices can vary greatly from one bank to another.
The majority of brokers and Forex (Forex Broker) a third-class retail, as they usually deal with the liquidity provider and one of the second layer. But this is not a permanent situation, providing some retail brokers direct access to several Mzodoa liquidity, and that they are themselves part of the second layer. This applies to "electronic communications networks" (ECNs), which are usually the transfer of individual traders directly to banks, brokerage market. For more information on how these differences impact on individual traders, please read the article "How does the Forex brokers."