FOREX — the foreign exchange market or currency market or Forex is
the market where one currency is traded for another. It is one of the
largest markets in the world.
Some of the
participants in this market are simply seeking to exchange a foreign
currency for their own, like multinational corporations which must pay
wages and other expenses in different nations than they sell products
in. However, a large part of the market is made up of currency traders,
who speculate on movements in exchange rates, much like others would
speculate on movements of stock prices. Currency traders try to take
advantage of even small fluctuations in exchange rates.
In
the foreign exchange market there is little or no 'inside information'.
Exchange rate fluctuations are usually caused by actual monetary flows
as well as anticipations on global macroeconomic conditions. Significant
news is released publicly so, at least in theory, everyone in the world
receives the same news at the same time.
Currencies
are traded against one another. Each pair of currencies thus
constitutes an individual product and is traditionally noted XXX/YYY,
where YYY is the ISO 4217 international three-letter code of the
currency into which the price of one unit of XXX currency is expressed.
For instance, EUR/USD is the price of the euro expressed in US dollars,
as in 1 euro = 1.2045 dollar.
Unlike stocks
and futures exchange, foreign exchange is indeed an interbank,
over-the-counter (OTC) market which means there is no single universal
exchange for specific currency pair. The foreign exchange market
operates 24 hours per day throughout the week between individuals with
Forex brokers, brokers with banks, and banks with banks. If the European
session is ended the Asian session or US
session will start, so all world currencies can be continually in
trade. Traders can react to news when it breaks, rather than waiting for
the market to open, as is the case with most other markets.
Average
daily international foreign exchange trading volume was $4.0 trillion
in April 2010 according to the BIS triennial report.
Like
any market there is a bid/offer spread (difference between buying price
and selling price). On major currency crosses, the difference between
the price at which a market maker will sell ("ask", or "offer") to a
wholesale customer and the price at which the same market-maker will buy
("bid") from the same wholesale customer is minimal, usually only 1 or 2
pips. In the EUR/USD price of 1.4238 a pip would be the '8' at the end.
So the bid/ask quote of EUR/USD might be 1.4238/1.4239.
This,
of course, does not apply to retail customers. Most individual currency
speculators will trade using a broker which will typically have a
spread marked up to say 3-20 pips (so in our example 1.4237/1.4239 or
1.423/1.425). The broker will give their clients often huge amounts of
margin, thereby facilitating clients spending more money on the bid/ask
spread. The brokers are not regulated by the U.S. Securities and
Exchange Commission (since they do not sell securities), so they are not
bound by the same margin limits as stock brokerages. They do not
typically charge margin interest, however since currency trades must be
settled in 2 days, they will "resettle" open positions (again collecting
the bid/ask spread).
Individual currency
speculators can work during the day and trade in the evenings, taking
advantage of the market's 24 hours long trading day.
[earnforex.com]
Cryptocurrency:
A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions, to control the creation of additional units, and to verify the transfer of assets.[1][2][3] Cryptocurrencies are classified as a subset of digital currencies and are also classified as a subset of alternative currencies and virtual currencies.
Bitcoin, created in 2009, was the first decentralized cryptocurrency.[4] Since then, numerous cryptocurrencies have been created.[5] These are frequently called altcoins, as a blend of bitcoin alternative.[6][7][8] Bitcoin and its derivatives use decentralized control[9] as opposed to centralized electronic money/centralized banking systems.[10] The decentralized control is related to the use of bitcoin's blockchain transaction database in the role of a distributed ledger.[11]
Cryptocurrency Overview:
Decentralized cryptocurrency is produced by the entire cryptocurrency
system collectively, at a rate which is defined when the system is
created and which is publicly known. In centralized banking and economic
systems such as the Federal Reserve System, corporate boards or governments control the supply of currency by printing units of fiat money
or demanding additions to digital banking ledgers. In case of
decentralized cryptocurrency, companies or governments cannot produce
new units, and have not so far provided backing for other firms, banks
or corporate entities which hold asset value measured in it. The
underlying technical system upon which decentralized cryptocurrencies
are based was created by the group or individual known as Satoshi Nakamoto.[12]
As of September 2017, over a thousand cryptocurrency specifications exist; most are similar to and derived from the first fully implemented decentralized cryptocurrency, bitcoin. Within cryptocurrency systems the safety, integrity and balance of ledgers
is maintained by a community of mutually distrustful parties referred
to as miners: members of the general public using their computers to
help validate and timestamp transactions adding them to the ledger in
accordance with a particular timestamping scheme.[13] Miners have a financial incentive to maintain the security of a cryptocurrency ledger.
Most cryptocurrencies are designed to gradually decrease production
of currency, placing an ultimate cap on the total amount of currency
that will ever be in circulation, mimicking precious metals.[1][14] Compared with ordinary currencies held by financial institutions or kept as cash on hand, cryptocurrencies can be more difficult for seizure by law enforcement.[1]
This difficulty is derived from leveraging cryptographic technologies. A
primary example of this new challenge for law enforcement comes from
the Silk Road case, where Ulbricht's bitcoin stash "was held separately
and ... encrypted."[15] Cryptocurrencies such as bitcoin are pseudonymous, though additions such as Zerocoin have been suggested, which would allow for true anonymity.[16][17][18]
[wikipedia.org]
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