Forex Trading Mechanism The primary mechanism of Forex trade is as simple as a child’s play. Every currency has a specified exchange rate which is chiefly used to convert it into a different currency. For example, a single US dollar can be exchanged into 0.702395168 Euro. This currency pair becomes the USD/EUR currency exchange pair. Though the actual transaction is in reference to a conversion, it referred to as the purchase of the ‘Euro’. In this pair of currency, the currency which has been used to purchase is known as the base currency, whereas the currency which has been converted into or has been purchased is known as the quote currency. So how does this process actually materialize? As mentioned above this market is a worldwide market which is open throughout the day i.e. from 20:15 GMT (Greenwich Mean Time) on Sunday to 22:00 GMT of the immediate following Friday. Any person can invest into this market through a licensed broker, who charges commission for trades. Note that the legal systems and governing bodies such as the United States Securities and Exchange Commission often tend to impose certain governance and compliance on the trade processes, which people need to adhere to.
Posted on: Sat, 14 Sep 2013 14:52:36 +0000