FOREX is the largest market in the world, it accounts for up to 90% of the entire world capital market in terms of volume. Thousands of participants in this market - banks, brokerage firms, investment funds, financial and Insurance companies- within 24 hours a day they buy and sell currency, concluding transactions within a few seconds anywhere in the world. Combined into a single global network by satellite communication channels using the most advanced computer systems, they create a turnover of foreign exchange funds, which in total exceeds 10 times the total annual gross, national product all states of the world.

The need to move such huge money supply through electronic channels is that currency operations provide economic ties between participants in different markets located on different sides of state borders: interstate settlements, settlements between firms from different countries for the supplied goods and services, foreign investment, international tourism and business travel. The money that serves here as an instrument becomes a commodity itself, since the supply and demand for transactions with each currency in various business centers changes over time, and consequently, the price of each currency also changes. The international monetary device is based on the regime of floating exchange rates: the price of the currency is determined primarily by the market.

The foreign exchange market consists of two main components: the market stock trading and the over-the-counter foreign exchange market, which is actually interbank. It accounts for the bulk of operations carried out on FOREX.

FOREX is not a "market" in the traditional sense of the word. It does not have a single center, it does not have a specific trading place, like, for example, currency futures. Trading takes place by phone and through computer terminals simultaneously in hundreds of banks around the world. Hundreds of millions of dollars are bought and sold every few seconds, which is the essence of the so-called currency trading.

The main participants in the foreign exchange market are: commercial banks, currency exchanges, central banks, foreign trade firms, investment funds, brokerage companies, individuals.

Consider the main participants in the foreign exchange market:

Commercial banks

They carry out the bulk of foreign exchange transactions. Other market participants hold accounts in banks and carry out the necessary conversion and deposit-credit operations with them. Banks, as it were, accumulate (through operations with clients) the total needs of the market in currency conversions, as well as in raising / placing funds and go with them to other banks. In addition to satisfying customer requests, banks can conduct operations on their own at their own expense.

In the world currency markets, the largest influence is exerted by large international banks, whose daily volume of transactions reaches billions of dollars. These are banks such as Deutsche Bank, Barclays Bank, Union Bank of Switzerland, Citibank, Chase Manhattan Bank, Standard Chartered Bank and others.

Firms engaged in foreign trade operations

Companies involved in international trade show a steady demand for foreign currency (in terms of importers) and a supply of foreign currency (exporters), as well as place and attract free foreign exchange balances in short-term deposits. At the same time, the data of the organization of direct access to currency market, as a rule, do not have and carry out conversion and deposit operations through commercial banks.

Companies investing assets abroad (Investment Funds, Money Market Funds, International Corporations)

These companies, represented by various types of international investment funds, implement a policy of diversified asset portfolio management, placing funds in valuable papers ah governments and corporations of various countries. In dealer slang, they are simply called funds or funds; George Soros' Quantum Fund is best known for its successful currency speculation.

TO this species firms also include large international corporations that carry out foreign production investments: the creation of branches, joint ventures etc., such as, for example, Xerox, Nestle, General Motors, British Petroleum and others.

Central banks

Their function includes managing foreign exchange reserves, conducting foreign exchange interventions that affect the level exchange rate, as well as regulation of the level of interest rates on investments in the national currency.

The largest influence on the world currency markets is central bank USA -- Federal Backup System(US Federal Reserve or FED for short). It is followed by the central bank of Germany - the Bundesbank (Deutsche Bundesbank) and Great Britain - the Bank of England (Bank of England also called the Old Lady).

Private individuals

Individuals spend a wide range of trading operations in terms of foreign tourism, translations wages, pensions, fees, purchase and sale of cash currency.

Currency exchanges

In a number of countries with transition economy currency exchanges operate, the functions of which include the exchange of currencies for legal entities and the formation of a market exchange rate. The state usually actively regulates the level of the exchange rate, taking advantage of the compactness of the exchange market.

Currency brokerage firms

Their function is to bring together the buyer and seller of foreign currency and to carry out a conversion or loan and deposit operation between them. For their mediation, brokerage firms charge a brokerage commission as a percentage of the transaction amount.

The brokerage firm, which has information about the requested rates and rates, is the place where the real exchange rate and real interest rates for already concluded transactions are formed. Commercial banks receive information about the current level of the exchange rate from brokerage firms.

Among the brokerage firms in the international currency markets, the most famous are such as Lasser Marshall, Bierbaum, Harlow Butler, Tullet and Tokyo, Coutts, Tradition and others.

On Russian market brokerage services for conversion and deposit operations are provided by brokerage companies: Intermoney Financial Products, Interbank Financial House, Russian International Currency and Stock Exchange, ADIX firm.

Introduction

Chapter 1. Organization of the world currency market

1.1. Concept and types of currency markets

1.2. The history of the development of the foreign exchange market

1.3. world currency FOREX market and its members

1.4. Determination of rates in the foreign exchange market

Chapter 2. Currency transactions

2.1 The concept and types of foreign exchange transactions

2.2 Currency transactions spot

2.3 Forward currency transactions

Conclusion

Bibliography

Introduction

Rapidly developing international trade, investment activities, and on the other hand, the existence of national money is the basis economic relations about currency exchange. Each sovereign state has its own currency. You can buy a lot on it, but only in this particular state. Other countries have their own monetary units, and only they are allowed to legally circulate there. All other, that is, foreign, money is usually called currency (foreign currency ) . In order to be able to purchase goods and services abroad, it is necessary to have the appropriate foreign currency. The operation, when a certain number of foreign units are received for a unit of their money, is called a conversion, exchange or purchase of a currency, and the totality of economic relations that arise when using national monetary units in international settlements, forms the foreign exchange market. Foreign exchange markets play a major role in economic life developed countries. The last few decades have been marked by a rapid globalization of economic activity. Trade, production and investment have become more international than ever.

The globalization of the world economy has led to an ever-increasing volume of cross-border commercial and trade transactions. Any trade that spans more than one currency area usually involves the conversion of one currency to another, which is the foundation of a trading currency.

Chapter 1. Fundamentals of the organization of the world currency market

1.1 The concept and types of foreign exchange markets

The foreign exchange market is an official financial center where the purchase and sale of currencies and securities in foreign currency is concentrated on the basis of supply and demand for them. In other words, from a functional point of view, the foreign exchange market provides timely international settlements, insurance against foreign exchange risks, diversification of foreign exchange reserves , foreign exchange intervention, making profit by their participants in the form of a difference in exchange rates. Currency intervention is a targeted operation for the purchase and sale of foreign currency to limit the dynamics of the national currency exchange rate to certain limits of its increase or decrease. From an institutional point of view, the foreign exchange market is a combination of banks, currency exchanges and other financial institutions. From an organizational and technical point of view, the foreign exchange market is a set of telegraph, telephone, telex, electronic and other communication systems that connect single system banks of different countries that carry out international settlements, credit and other currency transactions. The decisive factor in currency trading is information. The exchange of information is carried out through a network of satellite and monitor communications. Monitors installed in all financial institutions trading in foreign currencies. Brokers and other interested persons and organizations also have them. The centers of the world currency market are international financial centers. MFCs are places of concentration of banks, specialized financial institutions. They carry out international currency, credit, financial transactions, transactions with securities, gold. Currently, we can distinguish Asian (with centers in Tokyo, Singapore, Hong Kong, Melbourne), European (London, Amsterdam, Paris, Frankfurt am Main, Zurich ), American (New York, Chicago, Los Angeles) markets. The main functions of the world foreign exchange market: 1) settlements under foreign trade agreements; 2) regulation of exchange rates; 3) diversification of foreign exchange assets of market participants; 4) insurance (hedging) currency risks; 5) making profit by participants (speculation) on the difference in exchange rates. There are the following types of currency markets.

In terms of distribution, the foreign exchange market is evaluated in terms of breadth of coverage:

The international currency market is a world market in which regional and domestic currency markets interact, and transactions are carried out with currencies that are widely used in international payment transactions.

A regional foreign exchange market is a territorial market in which countries within a given territory have come to an agreement on the operation of uniform rules for the foreign exchange market. Currently, there are Asian, European, American regional markets.

The national (or domestic) foreign exchange market is organized on the territory of a separate country. Due to differences in the level of development, each country within its territory can establish rules for the functioning of the internal foreign exchange market.

In relation to foreign exchange restrictions, foreign exchange markets are considered from the point of view of the absence or presence of a regulatory impact on the functioning of these markets:

A free foreign exchange market is a market where there are no foreign exchange restrictions. Currency restrictions, as a rule, are understood as a system of government measures to establish rules of conduct in the foreign exchange market.

A non-free foreign exchange market is a market with foreign exchange restrictions.

By types of exchange rates, the markets are divided from the point of view of the existing system for establishing the applied exchange rates in the foreign exchange market:

A market with a single exchange rate regime is a foreign exchange market with free exchange rates, i.e. with floating rates, the quotation of which is set at exchange auctions.

A dual currency market is a market where both fixed and floating currencies are used simultaneously. The dual currency regime is used by the state as a measure to regulate the movement of capital between the domestic and international capital markets and is introduced in order to control and, as a rule, limit the influence of the international capital market on the economy of a given state.

By the nature of organization:

The exchange currency market is a market in which currency transactions are carried out through a currency exchange.

The OTC currency market is organized by dealers who may or may not be members of the currency exchange. Dealers organize buyers and sellers through various means of communication.

1.2 History of the development of the foreign exchange market

The emergence of the international currency market was prepared by an objective process of development of international integration, since the strengthening of ties between states required the formation of acceptable ratios of national currencies.

Throughout the 19th century, Europe lived in the era of the gold standard, when the currencies of all countries were based on gold. The main holders of state gold reserves in European countries were central banks. They were delegated the right to print banknotes that had a solid gold backing. The gold standard system was highly stable monetary circulation, low inflation and low interest rates. Under the conditions of the existence of this system, there was a sharp rise industrial development at the turn of the 19th and 20th centuries.

At the beginning of the 20th century, there was a transition from the gold coin to the gold exchange standard. The key currency of the world monetary system became English pound sterling. The Bank of England has taken the position of the world's leading financial center. Most transactions on international markets were carried out in pounds sterling, the currencies of other countries were equated to the pound (through gold parity).

The First World War upset the balance that had developed in the world, large military expenditures led to an imbalance in the budgets of the leading countries of the world. As a result economic crisis In the 1930s, the gold standard system was significantly undermined. After the Great Depression in the United States and the lifting of the gold standard in April 1931, foreign exchange transactions declined significantly. By the mid-1930s, London was considered the main financial center. During the heyday of the British Empire, the British pound was the main trading currency and was also used as a reserve currency. In 1930, the Bank for International Settlements was founded in Basel (Switzerland), the main purpose of which was to monitor the international banking and coordination monetary policy in the currency markets. The Bank also practiced providing support in case of temporary difficulties to prevent the bankruptcy of some countries.

The Second World War further complicated the situation in the sphere of international settlements and liquidity.

This war was marked by the collapse of the pound sterling due to the destruction of the British Empire and the international credibility of the pound was undermined by the counterfeiting (counterfeiting) of the pound by Germany. After the United States entered the second world war, the dollar has become widespread and world famous. Meanwhile, Europe and Japan were practically excluded from the international financial market, and it was the United States that began to shape the future world economy and finance.

As a result of a compromise between the leading powers - the winners, the Bretton Woods system was created, in which the leading place was given to the US dollar. The dollar was directly tied to gold, it could be exchanged for it at any moment. The rest of the currencies were firmly pegged to the US dollar. The Bretton Woods system is a system of fixed parities, in which the US dollar occupied a key position. The stability of this system depended on the stability of the US currency. Disorder of the US balance of payments has shaken the position of the US dollar in the international market and stimulated the demand for gold from some countries and, above all, France. The US gold reserves were rapidly declining. By the early 1970s, it was only a few percent of the dollar in circulation. August 15, 1971

Results of the study of the Forex and derivatives market, conducted every three years by the Bank for International Settlements.

Forex statistics in 2016

September 1, 2016 Bank for International Settlements (BIS)) published his regular study of the Forex market and the OTC derivatives market.

BIS conducts and publishes Forex turnover statistics every three years.

The purpose of the study is to increase the transparency of the over-the-counter market and help its participants to follow the development of global financial markets. On this moment this is the only official Forex report.

BIS has been researching the performance of the Forex market since 1986. The most recent study was conducted in April 2016, its results were published on September 1. The study took into account the reporting of central banks and other public institutions from 52 countries, data from 1300 commercial banks and other participants. All information has been analyzed and summarized by BIS in a manner that eliminates double digits.

Summary:

1. According to the published BIS report, there is a decrease in trading volumes in the foreign exchange market by more than 5%.
2. The US dollar continues to take a leading position.
3. Trading volumes in euros and Japanese yen decreased.
4. The share of emerging markets has increased. The Chinese Yuan has become the 8th most popular currency in the world.

Let's take a closer look at the information of the BIS statistical report.

Analysis by currencies and currency pairs

Since 2013, BIS has included 24 currencies and 47 currency pairs. Let's briefly consider the dynamics of the most active currencies.

1st place - USD (4 661 4,458) billion $
The US dollar maintained its dominant position, although the volume of trade decreased slightly compared to previous period. With his participation, 88% of all Forex transactions were concluded.

2nd place - EUR (1 789 1,591) billion $
The role of the European currency has been declining since 2010, when the European debt crisis began. The share of transactions with the euro decreased from 39% in 2010 to 31% in 2016. However, the second place still belongs to the European currency.

As a result, the volume of trading in popular euro pairs - USD/EUR, EUR/GBP, EUR/JPY and EUR/CHF - is also falling. Growth was shown only by the Scandinavian pairs EUR/SEK and EUR/NOK with the Swedish and Norwegian kroner.

3rd place - JPY (1 234 1,097) billion $
Yen trading volumes decreased by 1%, but it should be taken into account that in April 2013, its trading volumes were greatly overestimated monetary policy bank of Japan. The trading volumes of the most active yen pairs - USD/JPY, EUR/JPY and JPY/AUD - also decreased noticeably.

4th place - GBP (633 650) billion $
In April 2016, the pound sterling showed an increase compared to the previous period. Time will tell how the pound will react to the results of the referendum on .

5th place - AUD (463 353) billion $
The Australian dollar is not trading as actively as in the previous period.

6th place - CAD (244 261) billion dollars
Strengthened positions compared to 2013.

7th place - CHF (276 243) billion $
Lost some market share.

8th place - CNY (120 202) billion $
The Chinese yuan is the growth leader among emerging market currencies. Since 2013, China's currency has significantly strengthened its position on the global stage. It broke into the 8th place among the most actively traded currencies, having increased its share from 2 to 4%. 95% of all transactions were made with the USD/CNY pair, which rose from 9th to 6th place among the most popular pairs.

In addition, the turnover of developing currencies in the Asia-Pacific region increased: the South Korean won KRW, the Indian rupee INR and the Thai baht THB. But the record holders of the group of developing currencies of the last period - Russian ruble and the Mexican peso lost in volume. Among European currencies, the Swedish and Norwegian krone– SEK and NOK.

Shares of currencies in the market, in percent:

Growth/fall in the share of currencies compared to the previous period, in percent:

Analysis by instrument

BIS considers two main groups of Forex instruments - spot and swap. This time they developed in different directions. The spot market contracted for the first time compared to the previous period - by as much as 19%, and the volume of swap transactions increased by 6%, although their growth slowed significantly compared to the previous period.

Trading activity of other derivatives has changed slightly. Forward outright trading volume increased by 3%. Currency swaps rose by 79%. Option trading volume decreased by 24%.

In the explanatory notes to the report, BIS gives the following definitions of Forex market instruments:

Spot transactions– include transactions on the exchange of two currencies with delivery on the same day.

Swap trades- transactions involving the exchange of two currencies on a certain date in the future at the price current at the time of the conclusion of the contract, and the reverse exchange of the same two currencies in the future at a fixed price. This also includes spot transactions with overnight delivery or within two business days.

Outright forwards– non-standardized transactions on the exchange of two currencies with delivery in more than two business days, as well as other futures deals in foreign currencies, non-deliverable forwards and contracts for difference.

Currency swaps- transactions in which the parties exchange funds in different currencies during an agreed period and make the reverse exchange at a predetermined rate at the time of redemption.

Options- contracts that give the right to buy or sell a currency for another currency at a certain rate during a specified period.

Analysis by market participants

The BIS study is based on the reporting of various financial institutions on three main groups of counterparties. As a result, we have the following distribution of market shares among the three main sectors:

• Financial institutions that took part in the study and submitted reports - 42%;
• Consumers in the non-financial sector (corporations and governments) - 7%;
• Other financial institutions - 51%.

The group of financial institutions that provided reports included large commercial and investment banks, as well as securities trading firms that conduct foreign exchange transactions on their own or on behalf of clients (large corporations, governments, non-financial institutions). Usually this big players operating on electronic platforms like EBS or Reuters.

Non-financial consumers - corporations, non-financial government institutions, individual investors operating through online retail trading platforms or other dealers.

Other financial institutions include smaller commercial and investment banks and securities trading firms, mutual funds, hedge funds, pension funds, currency boards, building societies, leasing companies, insurance companies, corporate firms and central banks.

Analysis by geography of trade

Trade is still concentrated in the world's financial centers - the UK, the US, Singapore, Hong Kong and Japan. The volume of turnover passing through these financial centers amounted to 77% of the total.

Main Findings of the BIS Study

The source of information is the official report published on the website of the Bank for International Settlements. Here you can find complete Forex statistics in pdf, xls and csv files in English.

WHAT IS FOREX?

FOREX is an interbank foreign exchange market that was formed in 1971, when international trade moved from fixed to floating exchange rates. At the same time, the exchange rate of one currency relative to another is determined in the most obvious way - by exchange with the ratio between them that both parties agree to.

FOREX is the largest global market. For example, the world volume of the securities market is approximately 300 billion dollars a day, while the daily turnover of the international currency market FOREX is estimated at 4-5 trillion dollars!

However, FOREX is not a market in the traditional sense of the word. It does not have a specific place of trading, such as stock exchanges. In the international currency market, trading takes place only through computer terminals. FOREX works 24 hours a day, and currency exchange does not stop during the entire working week (from Monday to Friday).

The main participants in the foreign exchange market are banks, investment funds, brokerage companies, etc. All of them sell and buy currency in connection with business needs and (or) for speculative purposes - to earn on resale.

FOREX TRADING IS AVAILABLE FOR EVERYONE!

Now individuals (traders) have the opportunity to successfully work on the international Forex market using software And information support Forex brokers (dealing centers). Thanks to the margin trading system, market entry is now available to individuals with a capital of several hundred dollars, although traders with a deposit of $5,000 or more usually have a stable and high income.

As a rule, they are formed from the two-letter ISO-3166 country code and the first letter of the currency. There are few exceptions to the rule, in particular, the European currency euro, which is denoted as EUR, and the ruble, denoted by RUB, and not RUR, as one would expect.

Exchange rates show the ratio of monetary units of different countries in relation to each other. Rate codes are represented by 6-letter words consisting of two three-letter currency codes. In the first place, as a rule, is the code of a more significant currency. Quotes are expressed in units of the second currency for one unit of the first.

For example, USDCHF (USD-CHF) quotes show the amount Swiss francs for one US dollar, while GBPUSD (GBP-USD) quotes, on the contrary, show how much US dollars should be paid for 1 British pound. More detailed information about codes financial instruments can be found in the corresponding table at the link above.

HOW TO READ FOREX QUOTATIONS?

Forex quotes are expressed in five- or six-digit numbers. For example, USDJPY = 114.90 means that 1 US dollar is valued at 114.90 Japanese yen (i.e. for 1 dollar they are willing to pay that many yen when buying or selling).

At the same time, GBPUSD = 2.0252 means that 1 British pound is valued at 2.0252 US dollars. IN general case, if the quote is XXXYYY = Z, then this means that for one unit of XXX they give Z units of YYY.

When the quote changes, for example, USDJPY = 114.92 to USDJPY = 114.93 or GBPUSD = 2.0254 to 2.0255, the price is said to have changed by 1 pip.

It follows from the above that in this example, the yen DECREASED by 1 point, and the pound UP by 1 point. From the above, it follows that only the charts of the euro (EURUSD) and British pound(GBPUSD), i.e. currencies with a "reverse" quotation reflect the actual movement of their prices (i.e. the chart is up - the price is higher), and the growth (i.e. the movement of the chart up) for USDJPY and USDCHF (currencies with a "direct" quotation) does not mean an increase , but a decrease in their quotes (prices).

BID AND ASK PRICES OR HOW CURRENCY IS BUYED/SOLD IN FOREX.

As you know, any transaction is made at a very specific and specific price, while in the Quote Spread Sheet, three prices come in for each currency, for example:

Each of the participants in the Forex market for each specific transaction acts as either a SELLER of a certain currency, or a BUYER. In this case, the seller offers a higher currency, for example, GBPUSD at 2.0254, and the buyer asks for a cheaper currency, for example, GBPUSD at 2.0250.

Accordingly, the seller's offer price is called ASK, and the buyer's price is called BID. Therefore, if you assume that the GBPUSD will rise in price (on your chart, the GBPUSD curve is going up), then you decide to buy the pound while it is cheaper, in order to sell it higher later.

You can buy (this operation is called BUY) only from the seller, who will offer it at the ASK price. When you sell the pound (the sale operation is called SELL), the buyer will offer a BID price for it (this is true for all currencies).

It obviously follows from this that if you OPEN a position (the operation is called OPEN), i.e. made a BUY GBPUSD, and immediately want to CLOSE it (the operation is called CLOSE), i.e. sell just bought pounds, then you can do it only at a loss, just as it would be in any exchange office.

Therefore, in order for you to make a profit, the price of the currency must go in the direction you assume more than the difference between BID and ASK.

The third number is called LAST - in the Forex market, this is the average value between the last BID and ASK.

Only currencies with reverse quotes rise in price when moving up on the chart.

Obviously, the rule that a BUY operation makes a profit on an upward move for some currencies and a loss for others will create inconvenience. Therefore, when performing a BUY operation for currencies with a direct quotation, it is not the currency itself that is bought, but the US dollar, the currency itself is sold.

For example, BUY USDCHF at 1.1724 buys $100,000 for 117,240 Swiss francs. Thus, the BUY operation always brings profit when the chart moves up, and SELL - when the chart moves down.

Summarizing the above, OPEN BUY (up) occurs at the ASK price, and CLOSE - at the BID price; OPEN SELL (down) - at the BID price, and CLOSE - at the ASK price.

Sometimes quotes are shown as a pair, for example, 114.88/92. This notation denotes a BID/ASK pair. The BID value is written first, followed by the last two digits of the ASK quote.

Knowing that ASK is greater than BID, and that the difference between them does not exceed 100 points, it is always possible to unambiguously determine the value of the second quote. IN this case ASK = 114.92.

FOREX STOP AND LIMIT ORDERS

Now let's take a look at some useful trading instruments, allowing to a certain extent to protect you from unforeseen losses and fix the planned profit. These are STOP and LIMIT.

In earlier open position at any time (during the working hours of the market), you can set an instruction to close it when the price of the currency reaches a certain specific value.

For example, you open a position, hoping that the quotes will go up (according to the chart). At the same time, in order to insure yourself against significant losses in case of a significant downward movement of the currency, especially in a situation where you do not control or may lose control over the market, you put STOP, i.e. specify the price value below its current value, at which your position should be closed without additional instructions.

Similarly, if you are open down, then you indicate the price above its current value. At the same time, you should keep in mind that if the STOP is too close to the current value, then an accidental price rebound may close a correctly opened position with a loss, and if it is too far, the losses may turn out to be unreasonably large.

In turn, LIMIT is the quote you specified, upon reaching which the position will be closed with a profit, i.e. The LIMIT quote is always higher than the current value if you play up, and lower if you play down.

There is a very common mistake that almost all novice traders make. It is always necessary to remember at what quote - BID or ASK the order should be executed.

Consider an example of a BUY position.

As mentioned above, a BUY position is opened by ASK and closed by BID. Those. STOP or LIMIT will only be executed when the BID reaches the specified price. Because ASK on the chart is always higher than BID, then HIGH of the chart is always ASK, and LOW is BID. Therefore, the chart must pass the LIMIT by the amount of the spread before the LIMIT is executed. A STOP will most likely be executed as soon as the chart touches the price.

As a rule, novice traders are very surprised when they find that their LIMIT has not worked, despite the fact that the HIGH chart is a few points higher than the LIMIT price. It should be, because HIGH should be higher than LIMIT not less than the value of the spread.

FOREX TRADING - YOUR WAY TO FINANCIAL INDEPENDENCE!

If you are persistent enough in mastering trading on the FOREX currency market, you will be able to gain financial freedom for yourself and the opportunity to work as much as you see fit.

There are several ways how to make money successfully on forex, choose the best option for yourself and may good luck and a passing trend be with you!

The foreign exchange market can be international or domestic. Internal operates within one country. International covers the currency markets of all countries of the world. Currency markets can be divided into exchange and over-the-counter.

The exchange currency market is an organized market where trading is carried out through an exchange that establishes trading rules and provides all conditions for organizing trading according to these rules.

In the over-the-counter foreign exchange market, purchase and sale transactions occur without reference to a specific place of trade. As a rule, it is organized by special companies that provide services for the purchase and sale of currencies. Trading operations on it are now carried out mainly via the Internet. In terms of trading volume, the over-the-counter foreign exchange market significantly exceeds the exchange one. The most liquid in the world is the international over-the-counter Forex currency market. It operates around the clock and in all financial centers of the world.

Forex (FOREX - FOReign EXchange Market) is a global international market, whose commodity is currencies. Its distinctive feature is the formation of prices based on an agreement between the participants, which depends only on the supply and demand for a particular currency.

The Forex currency market was born in 1971 and is by far the largest and most liquid financial market. The daily turnover of trading on it is about 4 trillion dollars. The Forex currency market is available to both institutional institutions and private traders around the world.

Participants of the Forex currency market

The main participants in the Forex currency market include:
- central and commercial banks;
- investment funds and companies engaged in trading operations with foreign partners;
- currency exchanges, brokerage and dealing companies;
- individuals.

The volume of one contract with real delivery of currency on the second working day is about 5 million US dollars. The cost of one conversion payment is up to $300. The cost of an interbank information and trading terminal is up to 6,000 dollars per month. Due to these conditions, direct conversions are not carried out in the Forex currency market. small amounts. It is cheaper to turn to financial intermediaries (a bank or a currency broker) who will convert for a certain percentage of the transaction amount. At in large numbers clients and multidirectional orders, intermediaries regularly encounter situations of internal clearing, so it is far from always necessary to carry out real conversion through the Forex currency market.

Session times

Forex is a system that unites the currency markets of different countries. And since they are all located in different time zones, the Forex currency market operates around the clock throughout the working week.

The Forex week starts at midnight from Sunday to Monday and closes at midnight from Friday to Saturday. The trading of market participants depends on their location and time zones. There are several different trading sessions.

Schedule of trading sessions in Moscow time:
Pacific from 01:00 to 10:00
Asian from 04:00 to 12:00
European from 10:00 to 19:00
American from 17:00 to 02:00

Daylight Saving Time (March to October) is indicated. In winter (October to March), sessions start and end an hour earlier.

The largest volume of trading operations in the Forex currency market takes place in the European session. American and asian session are the most aggressive. And the Pacific session is considered the calmest.

Daily turnover in the Forex market

The daily volume of trading operations in the world in the Forex currency market reaches $4 trillion. The London market makes almost 32% of the turnover, the US market - 18%, Germany - 10%. Of the total volume of foreign exchange transactions, transactions involving US dollar make up 70%. The share of Internet brokers now accounts for almost 10 percent of the turnover of the entire Forex currency market.

The Forex currency market has a number of currencies that are considered the main ones - it is with their use that most daily transactions are made:
USD - US dollar. Without a doubt, the basis of the Forex currency market.
EUR - euro, the currency common for the European space, the second most popular in Forex.
GBP (Great Britain Pounds) - pound sterling, National currency Great Britain.
CHF - Swiss franc.
JPY - Japanese Yen.
AUD - Australian dollar.
CAD - Canadian dollar.
NZD - New Zealand dollar.

It is believed that the daily turnover in the Forex currency market was:
- in 1992 - 1 trillion. dollars;
- in 1997 - 1.2 trillion. dollars;
- in 2000 - 1.5 trillion. dollars;
- In 2005-2006, the volume of daily turnover in the Forex currency market fluctuated, according to various estimates, from 2 to 4.5 trillion. dollars; - in 2010 - 4 trillion. dollars;
- predicted further growth of intraday turnover to 10 trillion. dollars in 2020.

STATE REGULATION OF FOREX CURRENCY MARKET

The Forex market is based on the principle of free currency conversion, which implies the absence of government interference in the conclusion of foreign exchange transactions and on the guarantees of freedom of such operations. On the other hand, rules and restrictions on the provision of intermediary services, which regulate, first of all, the relationship between the client (trader) and the intermediary (broker).

Control over the conduct of foreign exchange transactions in Russia is carried out by the Central Bank. However, the legislation does not provide for free unlimited conversion operations. Due to the peculiarities of the currency and tax legislation dealing centers registered in Russia usually do not have the legal right to provide financial services. As a rule, they operate on the basis of a betting license. Most large dealing centers generally have foreign registration, and local representative offices do not bear any legal responsibility or they do not have official registration at all. The client of such a company often does not have a real opportunity to challenge its actions and obtain legal protection in conflict situations.

FOREX FUNCTIONS

The main macroeconomic functions of the Forex currency market are:
- the formation of the exchange rate under the influence of supply and demand;
- providing conditions and mechanisms for the implementation of monetary and economic policy states;
- creation of subjects currency relations conditions for the timely implementation of international payments for current and capital settlements and assistance due to this development foreign trade;
- providing a mechanism for protection against currency risks and investment of speculative capital;
- Diversification of foreign exchange reserves.

Advantages of the Forex currency market

The Forex currency market is one of the most profitable. Compared to other markets, it has huge advantages.
1. Round the clock operation. The Forex currency market is open 24 hours a day, 5 days a week. On it at any time of the day you can find active currency pairs for trading.
2. Free work schedule. The trader trades independently when he sees fit. You can trade in the morning, evening or night, depending on your preferences. In fact, trading is the work of a freelance artist who plans his own working day and determines the size of the load.
3. Minimum overhead. Trade is carried out online, so there is no need to rent premises, warehouses and transport goods. You can work wherever you have a computer with Internet access. The Forex currency market traditionally does not have any commission expenses, except for the spread - the natural market difference between the purchase price and the sale price. Loan terms are also attractive.
4. High liquidity. There are always a sufficient number of buyers and sellers in the Forex currency market, which provides the trader with the opportunity to make transactions of any volume. There has always been and always will be a constant demand for the currency, only the price can change.
5. Leverage. The Forex currency market uses a margin trading scheme: you are provided with leverage (from 1:1 to 1:100 or more). With a leverage of 1:100 and a security deposit of 1 thousand US dollars, you can open a position in the amount of 100 thousand US dollars. Consequently, a small starting capital allows you to carry out transactions for amounts that exceed it hundreds of times.

The advantages of the Forex currency market are also:
- the possibility of obtaining large incomes;
- instant conclusion of transactions;
- you can have a small starting capital;
- work for oneself;
- free trade training;
- Opportunity to constantly improve.

Disadvantages of the Forex currency market

Trading is a great opportunity to prove yourself and earn good money. However, the Forex market also has disadvantages:
1. Making money in the market requires knowledge and time.
2. In order for one trader to make money, another must lose them and you will not always be the first.
3. The Forex currency market has no central regulation. It doesn't have clearing center or centralized market. Private forex brokers are constantly accused of various types deception and fraudulent activities against their customers.
4. Risk of choosing an inexperienced broker.
5. Fairly wide bid/ask spreads.
6. Negative swaps. Depending on currency pairs, swaps can be both positive and negative.
7. For a stable income, you need to have large sum money.
8. In a matter of minutes, you can lose the entire amount of invested money (merge the deposit).
9. Dependence on electrical equipment that can fail or due to a power outage at the most crucial moment.

The advantages and disadvantages of the Forex currency market practically do not affect the number of people who want to try their hand at this difficult business, because the main factor that attracts new traders here is the exceptional opportunity to get rich.

RISKS IN THE FOREX CURRENCY MARKET

The main rule of business "The higher the risk - the greater the profit" is no exception when trading on the Forex currency market. The more profit you want to make, the higher the risk of losing all your money. Therefore, if you want to trade successfully, you should be well aware of what risks you may face.

Rules for trading in the Forex currency market without risk:
1. Work with only reliable brokers.
2. Using reasonable leverage, the larger the leverage, the greater the risk of losing everything, even with the slightest trend movement.
3. Opening new positions only if you understand the market situation.
4. Placement of stop-loss orders immediately after the start of trading, with its subsequent movement to the breakeven area.
5. Trading in the direction of the trend, trading against the trend is generally riskier.
6. Closing the position as soon as the price went against you.
7. Use of uninterruptible power supplies and alternative Internet connection.

The biggest secret of the Forex currency market is that every novice trader lowered his first trading account. Experience and skill come with age. Don't despair and be patient. Forex, although it is one of the most difficult markets, but you can also make good money on it.

Who makes money in the Forex market

Banks work and earn on Forex, which carry out currency transactions there in the interests of their clients and charge a percentage for this.

Forex brokers work and earn money, serving your trade and providing you with "leverage". Their profit is the spread: the difference between the buying and selling price of a currency. It is beneficial for them that the trader makes as many transactions as possible.

Successful traders work and earn on the Forex currency market - professionals who have spent several years honing their skills.

Main question, which worries most novice traders - is it really possible to make money on the Forex currency market? The answer is yes, it's real. But only earn, not win. While the trader will play, he will be at a loss. And only when he starts to really work, all the advantages of stock trading will open for him.

To become a successful trader you need:
- experience and knowledge;
- patience and purposefulness;
- discipline;
- capital.

Forex, with all its obvious advantages, remains a complex job that requires experience and knowledge of the market from the trader. This is a complex system that implies knowledge and understanding of the fundamentals of macroeconomics, the foreign exchange market, and exchange trading. Anyone who came to Forex to study and work, with a certain amount of patience and talent, will eventually master this profession.

After mastering the terminal and trading methods, it will be necessary to overcome psychological barriers. Fear, greed, lack of discipline, self-control and the ability to manage one's own emotions prevent a trader from successfully working on the Forex currency market.

Working on the Forex currency market involves a thoughtful approach. There is no place for excitement and fortune. Only system trading will be profitable and stable.

To work on Forex, you need a starting capital of 200,000 rubles. With a smaller amount, it's not even worth trying.

Successful work in the Forex currency market very much depends on the broker you choose.

Good luck with your trading.