Foreign exchange markets are an area of economic relations that are manifested in transactions involving the placement of temporarily idle funds, capital investment and the purchase and sale of foreign currency. Here, the interests of the acquirers of such funds and their sellers are agreed upon. Foreign exchange markets perform functions such as credit, clearing, hedging and regulation of purchasing power. Their main participants are financial institutions, banks, government agencies, investors, importers and exporters. In this area, they have various needs, including such as transferring from one country another purchasing opportunity, investing personal funds in different parts of the world and, of course, hedging positions. Foreign exchange markets need all this.
Before the start of the work of local financial centers, brokers organize communication with partners from around the world in order to exchange information on achievements, development trends and various significant events in those areas where trading is already carried out. This information is supplemented by economic data, technical analysis and a political situation report. This allows a much broader assessment of the situation on the market, and also contributes to the preparation for subsequent activities in this area.
Communication between brokers is provided by means of computer support, telephone lines and electronic communications. To perform their work in the dealing rooms of financial institutions, high-speed information systems are simply irreplaceable. Market prices are able to change quickly due to their sensitivity. That is why banks should have excellent communication with their partners for the most rapid implementation of trade.
Modern currency markets have some key features that should be noted: the continuity of various operations, the widespread use of electronic communications, internationalization, unified technology, currency instability and credit risk insurance. At the same time, they are both a venue for the game and an object of close attention from international financial organizations and highly developed countries in the industry.
The structure of the foreign exchange market will be more understandable if it is classified according to some criteria:
1) territory: world, regional and national markets;
2) functions: international trade services, investments, speculation, hedging;
3) application of courses: with one or more modes;
4) type of agreement regarding the term: derivatives or current markets ;
5) means of regulation: markets with currency restrictions and regulation or with free exchange rate formation.
But this is general information. In order to understand how to make money in the foreign exchange market, it is necessary to study in detail the most significant information about their activities and the financial operations they perform.