forex currency exchange
Participants
* Commercial Banks
* Central Banks
* Currency Exchanges
* Investment Funds
* Brokerage Houses
Participants of this market are, first of all, large commercial banks through which the basic operations under the instruction of exporters and importers, investment institutes are carried out, insurance and pension funds, hedge and individual investors. Also these banks operations and in the interests due to own means, thus at large banks volumes of daily operations reach billions dollars, and at some banks even the basic part of the profit is formed only due to speculative operations with currency.
Except for banks, as the active participant of the market the broker houses which are carrying out a role of the intermediary between a plenty of banks, funds, commission houses, dealing centers, etc. Commercial banks and brokerage houses not only make operations on sale and purchase of currency under the prices which are exposed by other active participants, but also offer the own prices. Thus, they actively influence process of pricing and a life of all market, therefore their name is Market - Makers.
As against active participants, passive participants of the market cannot expose own quotations and make purchase - sale of currency under the prices which are offered by active participants of the market. Passive participants of the market pursue usually following purposes: payment of export-import contracts, foreign industrial investments, opening of branches abroad or creation of joint ventures, tourism, hedging of currency risks, etc.
The central banks of the countries leave on FOREX, as a rule, not with the purpose of extraction of the profit, and with the purpose of check of stability or correction of an existing rate of national currency as last renders significant influence on a condition of a national economy. The central banks also leave on the currency market through commercial banks. Though the profit is not the basic purpose of these banks, unprofitable operations of them too do not involve, therefore interventions of the central banks mask usually and carried out through some commercial banks at once. The central banks of the different countries can carry out and the joint coordinated interventions.
If active participants make operations with the big sums of some millions dollars passive participants can use margin trade with the help of small insurance deposit they receive an opportunity temporarily to operate with the capital, in one hundred times exceeding this deposit. Such way of trade allows to take part in work of the currency market to fine investors with the small capital and thus to receive significant profit (According to leverage system). The structure of the basic participants of the market testifies that this market is actively used by " serious business " and for the serious purposes. That is far from being all participants of the market use FOREX in the speculative purposes.
As we already mentioned, change of exchange rates can lead to huge Profit/losses at export-import transactions. Attempts to be protected from currency risks force exporters and importers to apply for hedging those or other tools of the currency market: forward transactions, options, futures, etc. Moreover, even business which is not connected to export-import transactions, can have in loss at change of exchange rates. Therefore studying FOREX - an obligatory component of any successful business.
forex currency exchange
