The Foreign Exchange Market

This is a form of a financial market where a country can pit its own currency in exchange for other countries' currencies with the objective of strengthening or uplifting their respective assets' value on a global scale.

This market has no central office wherein physical or traditional trade takes place. The trade happens globally, occurs whenever a bank, a corporation, or an individual trader offers a trade to other banks or organizations who are then also entitled to place their currencies on the market's index. Whether to improve their currencies' current rating or to hedge from an oncoming recession, traders find this market to be the ground of choice in running the present-day economy as it is the most widely-known and most liquid of all types of financial markets existing today. Transaction happens twenty four hours a day and is limited to currency exchange alone. Banks, who happens to hold the final threshold, commits the trade through international phone calls.

The basic guideline of any specific trader is to buy low and sell high. Meaning to buy a currency which has an increasing rate and sell another which rate is decreasing on the other hand. The trade usually starts from a seller's initial move. A seller may put his trade which will be under the term ASK on the market's chart, and a certain buyer will try to buy it low and will then place his price for that specific currency under the column of BID. A buyer will always try to buy the prospective currency at a lower rate and then sell it when it eventually raise in value, depending on the respective country's global performance and different trade parameters that holds all the world's central banks equivocally.

This sector of the world's financial market is the most flexible and the least volatile compared to others. Though there are certain forces that needed to be considered before trying to place a selling price and buying in return. A country's economical performance, government policies, international trade parameters, and interest rate ratios all contribute to influence the rise or fall of any given price or rate of a specific currency. Still, the market players control the flow and result of every transaction through expecting a direct or indirect change in the value of their currencies by looking through the perspective of all countries involved. The chart of this exchange market is seen as a result of the traders' anticipation of currency values needed to be considered high or low while considering other traders' price bids in accordance from any previous attempts based on the basic guidelines stated above.