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Forex For Absolute Dummies
Forex (foreign exchange) refers to the foreign currency exchange market, the world’s largest financial trading market. Pass yourself as a forex expert with these buzz words: •Bid – to buy •Ask – to sell •Liquidity – financial ease of transaction,...Read More
How Much Margin You Need In Forex Trading?
Trading Forex has many advantages which are greatly appreciated by the Forex traders that have already mastered the markets and have improved their incomes and style of life. One of these great advantages of the Forex markets is the low margins...Read More
Major Advantages to Trading Forex
When most investors hear the word forex, the words that flash through their brain are "risky," "complicated," and "tiny profit margins." This is because the information on currency trading isn't as available and easy to access as the stock...Read More
Pivot Points in Forex: Mapping your Time Frame
It is useful to have a map and be able to see where the price is relative to previous market action. This way we can see how is the sentiment of traders and investors at any given moment, it also gives us a general idea of where the market is...Read More
Two Great Forex Indicators: Bollinger Bands and Fibonacci Retracements.
Forex trading is a fascinating way of earning a living online, and if you are seriously considering entering this fascinating world of forex trading you must consider, by all means, the learning and understanding of a number of indicators that...Read More
A Look at Forex Market Makers
A Look at Forex Market Makers
by Eddie Tobey
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The investor in the currency market takes for granted that a pair of currencies can be bought or sold at a moment’s notice. Once an order is placed with a broker, the trade is executed within seconds. It is, of course, not as easy as that.
Whenever a pair of currencies is bought or sold, there must be someone at the other end of the transaction. It is very unlikely that the investor will always find someone who is interested in buying and selling the same two currencies at the same amount, and at the same time. Hence, the question remains, “How is it possible that the forex investor can buy or sell at any time?” This is where the forex market makers come in.
The forex market maker is a bank or brokerage company that stands ready, every second of the trading day with a firm bid and ask price. This is good for the investor because when the investor chooses to buy and sell a pair of currencies, the market maker will purchase from and sell to the investor, even if they do not have a buyer and seller lined up. In doing so, they are literally “making a market” for the currencies.
Forex market makers ensure that the market is always functional and that the currencies in it will always fetch the market rate. Forex market makers do so by updating
their prices at intervals of at least 30 seconds and undertaking to trade if this is requested. Forex market makers must fulfill their obligations irrespective of whether the economic situation is favorable or unfavorable, or whether they lose or profit by doing so.
Typical forex market makers include Gain Capital, CMS Forex, Forex Capital Markets (FXCM), and Global Forex Trading, all of which are regulated by the Commodity Futures Trading Commission (CFTC) of the USA. Another prominent forex market maker is Saxo Bank, which is regulated by the Financial Services Authority (FSA) of Denmark.
Until recently, central banks, commercial banks and investment banks dominated the forex market. Due to the entry of forex market makers, other market players like international money brokers, large multinational companies, registered dealers, global money managers, and private speculators have entered the market in large numbers.
About the Author
Forex Brokers Info provides detailed information on forex brokers, forex trading and market makers, and other forex-related topics. Forex Brokers Info is the sister site of Incorporating in Florida Web.
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