The Distinctiveness of the Forex
The forex has come a long way from being an exclusive market of the financial industry's "big boys" to becoming the widely favored investment destination of international traders that it is today.
There are many reasons that paved the way for the 'democratization' of the foreign exchange market, many of them due to the advancement of telecommunication technology such as the Internet.
Even so, the forex still has to thank its own unique market characteristics that gained the attention and confidence of investors, big and small alike, to invest in its market.
So what are the characteristics of the forex that made it the vibrant and flourishing financial market that it is?
Here are a few of those distinctive characteristics:
A market with a non-existent trading field.
Two sets of structures generally comprise the finance industry. These are the operation market and the business network. These two structures are both present in most financial markets such as the stock exchange.
In the stock exchange, which is a centralized network of financial commodities, these two financial structures manifest themselves through the presence of integrated procedures and mediators so that the trading time and quoted price are standardized throughout numerous brokers. It is for this reason why markets such as the stock exchange are considered to have both of a trading market and a trading field.
The foreign exchange market on other hand has no such financial systems since the foreign exchange has no centralized market such as the New York Stock Exchange and the Tokyo Stock Exchange in the case of the stock market. The forex has developed the characteristic of a casual, yet global financial organization that is reliant on an advanced information system.
It is for this reason why the foreign exchange is dubbed as a market without a trading field.
An all day, all night trading schedule.
One of the important (and profitable) characteristics of the forex is the flexibility that its schedule offers to traders.
There is always a foreign exchange market available anywhere in the world, anytime. This allows investors who are constrained both by time and geography to schedule their foreign exchange dealings wherever, whenever.
A market that indicates and facilitates wealth reallocation.
Another characteristic of the foreign exchange market is that it is an important player in the world economy as it is both an indicator and facilitator in the shifting of wealth among countries through currency exchange.
The forex is an indicator of wealth shift because one can perceive the wealth disparity of nations through their currencies' exchange rate.
This exchange rate between currencies fluctuates through the years mostly because of two reasons: One, because the currencies themselves have lost their value in some way and/or two, because there is an increasing disparity between the economies of the two countries involved in the comparison.
It is also a facilitator of the shifting of wealth because one of the essential processes of this shifting is within the foreign exchange market which is currency exchange.
Coupled with the surge in technology, these exclusive characteristics possessed by the forex have led to the increase of foreign exchange investors worldwide. Knowing these characteristics that made the foreign exchange market the preferred financial vehicle for many will help anyone decide if the world of foreign exchange is really worth the investment.