The Structure Of The Forex
by Forex - April 15th, 2011. Filed under: forex market.To help you understand the Forex, we’re going to compare it with a market you’re most familiar with: the stock exchange. As you may already know, the stock market is somewhat monopolized. It’s got one entity that governs its prices and controls them. This takes place because a specialist executes all the orders for clients. In the event that the sellers exceed the buyers, the specialist is left with stocks that cannot be sold. What they won’t tell you is that as a result, the “specialist” increases the spread or the cost of the shares to stop the sellers from getting into the market. Thus, as you see the specialist manipulates the prices.
Unlike in stock trading, in Forex, you don’t have to go through a central exchange to open a position. The currency exchange is decentralized, which means there is no physical address like in the case of the New York Stock Exchange. The idea may be somewhat baffling to you, but it makes the Forex totally unique. There’s so much competition between brokers that you usually obtain the best deal. Note too, that despite the decentralization factor, the FX is well organized. It’s somewhat like a ladder with the retail traders at the bottom, followed by the market dealers, retail ECNs, Hedge Funds and corporations. The major banks are at the top of the ladder.
One of the important factors to consider in the Forex is that you can trade anywhere in the world.