Forex Training

Forex has no centralized market, unlike many other securities. There is no single centralized place for the trade of forex. Traders buy and sell forex via telephones and computers linked to brokers, bank and other traders around the world.

You will often hear the term INTERBANK discussed in forex terminology. This originally, as the name implies, was simply, banks and large institutions exchanging information about the current rate of exchange at which their clients or themselves were prepared to buy or sell a currency.

INTER meaning between and Bank meaning deposit-taking institutions - normally made up of banks, large institution, brokers or even the government.

The market has moved on to such a degree now that the term interbank now means anybody who is prepared to buy or sell a currency.

It could be two individuals or your local travel agent offering to exchange Euros for US Dollars. You will however find that most of the brokers and banks use centralized feeds to insure reliability of quote.

The quotes for Bid (buy) and Offer (sell) you see will most always be from the larger players in the market. London in the United Kingdom is the single largest center for the exchange of forex.

The main reasons that

London has a higher percentage of trade is that it has always been a financial center and also because of time zones.

The London market starts between 7am and 8am, which is the end of the trading day for Asia. Just as the Banks in London are beginning to open at 8am they can deal with other traders in Tokyo, Hong Kong or Singapore whose trading day is just coming to a close.

During the later part of the trading day in London, the U.S.A market opens up and so catches a healthy portion of that market as well.

Here is an interesting fact for you. Up until the 1930’s the British Pound used to be traded via telex machines run through cables, which led to the Pound being nicknamed ‘’cable’’. You can still often here the Pound called cable.

Also, until the Second World War the British Pound was the main reserve for most other countries. After the Second World War Britain’s economy was in tatters and the U.S. Dollar became the reserve of most countries.

This largely came about as a result of the 1944 Bretton Woods conference in New Hampshire, which established the foundation of the postwar global economy and the birth of the World Bank along with the International Monetary Fund.