80. Who Really Controls the Forex Market? | Forex
Information | Currency | Markets | Fx | Video | Assets | Lesson | Trading
View the entire lesson: http://www.informedtrades.com/20991-who-really-controls-forex-market.html Register for a free forex demo trading account: http://bit.ly/IT-forex-demo3 As we discussed in our last lesson the forex market is an over the counter market meaning that there is no centralized exchange where all trades are made. Because of this, the price that someone receives when trading forex has traditionally differed depending on the size of the transaction and the sophistication of the person or entity that is making that transaction. At the center or first level of the market is something known as the Interbank market. While technically any bank is part of the Interbank market, when an FX Trader speaks of the interbank market he or she is really talking about the 10 or so largest banks that make markets in FX. These institutions make up over 75% of the over $3 Trillion dollars in FX Traded on any given day. There are two primary factors which separate institutions with direct interbank access from everyone else which are: 1. Access to the tightest prices. We will learn more about transaction costs in later lessons however for now simply understand that for every 1 Million in currency traded those who have direct access to the Interbank market save approximately $100 per trade or more over the next level of participants. 2. Access to the best liquidity. As with any other market there is a certain amount of liquidity or amount that can be traded at any one price. If more than what is available at the current price is traded, then the price adjusts until additional liquidity enters the market. As the forex market is over the counter, liquidity is spread out among different providers, with the banks comprising the interbank market having access to the greatest amount of liquidity and then declining levels of liquidity available at different levels moving away from the Interbank market. In contrast to individuals who make a deposit into their account to trade, institutions trading in the interbank market trade via credit lines. In order to get a credit line from a top bank to trade foreign exchange you must be a very large and very financially stable institution, as bankruptcy would mean the firm that gave you the credit line gets stuck with your trades. The next level of participants are the hedge funds, brokerage firms, and smaller banks who are not quite large enough to have direct access to the Interbank market. As we just discussed the difference here is that the transaction costs for the trade are a bit higher and the liquidity available is a bit lower than at the Interbank level. The next level of participants has traditionally been corporations and smaller financial institutions who do make foreign exchange trades, but not enough to warrant the better pricing As you can see here, traditionally as the market participant got smaller and less sophisticated the transaction costs they paid to trade became larger and the liquidity that was available to them got smaller and smaller. In a lot of cases this is still true today, as anyone who has ever exchanged currencies at the airport when traveling knows. To give you an idea of just how large a difference there is between participants in the Interbank market and an individual trading currencies for travel, Interbank market participants pay approximately $.0001 to exchange Euros for Dollars where Individuals in the airport can pay $.05 or more. This may not seem like much of a difference but think about it this way: On $10,000 that is $1 that the Interbank participant pays and $500 that the individual pays. The landscape for the individual trader has changed drastically since the internet has gone mainstream however, in many ways leveling the playing field and putting the individual trader along side large financial institutions in terms of access to pricing and liquidity. This will be the topic of our next lesson.
Comments
-
I am going to share the story of a trader, who lost a huge amount of money in binary options trading. He was disappointed and very much frustrated. He even decided to leave trading. One of his friends suggested him to use another signal service for testing his luck like last one in binary options trading. And that last trip changed everything in a blink!! That signal not only gave him a huge profit, but he also recovered his previous losses in a very short period of time. Could you believe? That trader was me! And here is that awesome signal service===>>(Details Here >>> https://t.co/giG8WMMH3D ) .
-
I’ve learned this lesson over last few years, that don’t just blindly believe in something without confirming its truth because of some harsh experiences with binary options trading apps. But when I saw this app >>> https://plus.google.com/u/5/112753980861959598865/posts/KTn5DTNZH9m .I was astonished by the reviews that people all around the world gave and something that other apps were missing in their portfolios. I used this app and its results were exactly how they were presented in their website. So don’t waste your time on other apps and come to this.
-
I was really on luck to get such an effective system .This amazing tool that guarantees a definite 100% success on trading binary options online is still available. Word is spreading quickly about this app. As soon as the database reaches the initial target level, they will possibly stop all new sign-ups for free. If you already started signing up – you just need to complete the process. Check it out here right now: https://plus.google.com/u/0/102661247187820448417/posts/PMtf1SHvh7X . Don’t kick yourself later. Start making money now.
-
This is what the criminals want you to believe, in reality uniting the price of a single currency from all sources that you mentioned can not be except from a single central server.
-
old and way outdated. the smallest investor today can get 1 pip spreads.
-
Nice Video clip! Apologies for butting in, I would love your opinion. Have you tried - Brogan Unbelievable Forex Formula (do a search on google)? Ive heard some super things about it and my friend Sam at last amazingly made massive amounts with it.
-
Author you are going round and round in all of your videos.... I feel like you are not telling smth. perhaps that is normal...
-
I am new trader at GDMFX,I am seeing a lot of endorsemenst here but im a happy with my broker gdmfx and I feel safe knowing that I am dealing with a registered firm.:)=>gdmfx.com
-
how to copy top traders and make money in safety and get free $40 gift card in etoro HOWTOTRADEFOREX.ALLALLA.COM/2013/02/how-to-copy-top-traders-and-make-money
-
You guys should check out this EXTRAORDINARY website called FIREPA.COM . You can make money online and start working from home today as I am! I am making over $3,000+ per month at FIREPA.COM ! Visit Firepa.com and check it out! The soup orientates the equal mist. Why does the familiar sleep secure the disgust?
-
focus in order to reach your cash generating goals. Start making over $5,000+ per month online! Visit HOWTOTRADEFOREX.JUPLO.COM
-
Hi, have you heard about "Forex ReturnMAX" (just google it)? On their website you can watch a good free video. It helped Mike to double the capital within his forex trading account within three month very easily. It may help you as well...
-
Hello, have you considered the Thaintorm Forex System? (look for it on google). My sister says it helps people gain tons of pips.
-
FOREX IS A SCAM REGARDLESS OF WHICH BROKER YOU USE! DO NOT LOOSE YOUR MONEY! SATY AWAY FROM THE DEVIL'S GAME.
-
Interesting video - friend and subscribe for day trading, day trader, day trade videos, technical analysis...
-
This is fraud "software game" with a reverse strategy. If yu want to understand just have a trial with continous orders.. "BIGGEST SCAM OF 21ST CENTURY"
-
I think it's controlled by a central computer that reads the platform, make a little money and all hell breaks loose
-
Thanks for nice video. But I prefer free forex ea
-
thanks these help
-
too bad for some of you who will never get spot fx. this is informative but this is stuff i already know but dave is a great trader all around and newbies should listen up on this. nice video! keep it up! we need more like this when people who get discouraged know what they're up against so they can trade accordingly