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1.1 What is Forex? FOREX, an acronym for Foreign Exchange, is the largest financial market in the world.

With an estimated $1.5 trillion in currencies traded daily, Forex provides income to millions of traders and large banks worldwide. The market is so large in volume that it would take the New York Stock Exchange, with a daily average of under $20 billion, almost three months to reach the amount traded in one day on the Foreign Exchange Market. Forex, unlike other financial markets, is not tied to an actual stock exchange. Forex is an over-the-counter (OTC) or off-exchange market. Purpose The foreign exchange market is the mechanism by which currencies are valued relative to one another, and exchanged. An individual or institution buys one currency and sells another in a simultaneous transaction. Currency trading always occurs in pairs where one currency is sold for another and is represented in the following notation: EUR/USD or CHF/YEN. The exchange rate is determined through the interaction of market forces dealing with supply and demand. Foreign ExchangeTraders generate profits, or losses, by speculating whether a currency will rise or fall in value in comparison to another currency. A trader would buy the currency which is anticipated to gain in value, or sell the currency which is anticipated to lose value against another currency. The value of a currency, in the simplest explanation, is a reflection of the condition of that country's economy with respect to other major economies. The Forex market does not rely on any one particular economy. Whether or not an economy is flourishing or falling into a recession, a trader can earn money by either buying or selling the currency. Reactive trading is the buying or selling of currencies in response to economic or political events, while speculative trading is based on a trader anticipating events. Background Historically, Forex has been dominated by inter-world investment and commercial banks, money portfolio managers, money brokers, large corporations, and very few private traders. Lately this trend has changed. With the advances in internet technology, plus the industry's unique leveraging options, more and more individual traders are getting involved in the market for the purposes of speculation. While other reasons for participating in the market include facilitating commercial transactions (whether it is an international corporation converting its profits, or hedging against future price drops), speculation for profit has become the most popular motive for Forex trading for both big and small participants. The 8 Major Currencies: Whereas there are thousands of securities on the stock market, in the FOREX market most trading takes place in only a few currencies; the U.S. Dollar ($), European Currency Unit (), Japanese Yen (), British Pound Sterling (), Swiss Franc (Sf), Canadian Dollar (Can$), and to a lesser extent, the Australian and New Zealand Dollars. These major currencies are most often traded because they represent countries with esteemed central banks, stable governments, and relatively low inflation rates.

Currencies are also always traded in pairs (i.e. USD/JPY or Dollar/Yen) at floating exchange rates. Characteristics of Foreign Exchange Markets

In recent years, the foreign exchange market favors more and more people as it becomes a favorite for international investors, and this is strongly related to the properties of the forex market. The main characteristics of the foreign exchange market are summarized below. It is a market without a trading field The finance industry generally consists of two sets of systems, namely the operation market and the business network. Stock trading is carried out through stock exchanges, like the New York Stock Exchange and the Tokyo Stock Exchange, that are centralised business financial commodities - they consist of unified procedures and intermediaries such that the quoted price and transaction time are the same across various brokers. The investor can buy and sell their holdings through any broker, therefore the stock exchange is said to "consist of a trading market and trading field". On the other hand, foreign exchange transactions take place without any unification of the operation market and business network. The forex market has no centralised market like a stock exchange. The foreign currency trading network has formed into a global, non-formal organization that consists of an advanced information system. Forex traders are not required to hold a membership of any organization, but must obtain their colleagues trust and approval. The forex market therefore is said to "consist of a market but no trading field". Each day, the trading volume in the global forex market runs into several billions of U.S. dollars. Circulation work Due to the different geographical position of the various financial centres, the forex market operates 24 hours each working day. Early morning 0830 (New York time) New York market opens, 0930 Chicago market opens, 1830 Sydney opens, 1930 Tokyo opens, 2030 Hong Kong and Singapore open, before dawn 1430 Frankfurt opens, and at 1530 London market opens. The forex market therefore undergoes 24 hours of uninterrupted operation, from Monday to Friday each week. This kind of continued operation, free from any time and spatial barrier is an ideal environment for investors. For instance, a forex trader may buy the Japanese Yen in the morning at the New York market, and in the evening if the Japanese Yen rises in the Hong Kong market, the trader can sell in the Hong Kong market. The freedom to operate in multiple markets provides an enormous number of opportunities. Shift of Wealth In the foreign exchange market, the exchange rate refers to the exchange ratio between the currencies of two countries. Fluctuations in the exchange rate change will cause one currency to lose its monetary value, and at the same time increase the monetary value of another currency. For instance, over 20 years ago a single US dollar bought 360 Japanese Yen, whereas at present 1 US dollar buys 110 Japanese Yen; this explains that the Japanese Yen

has risen in value, and the US dollar has decreased in value (relative to the Yen). This is said to be a shift in wealth, as a fixed amount of Japanese Yen can now purchase many more goods than two decades ago. In recent years, the size of the foreign exchange market fund has constantly increased, causing more exchange rate fluctuation every day, and urging this wealth shift to be larger. Importance of the Foreign Exchange Market

Print this article The $1.5 trillion-per-day foreign exchange (FX) market surpasses stocks and bonds as the largest market in the world. Foreign exchange markets are critical for setting exchange rates between countries. 1. Liquidity

In terms of international trade, liquidity is the ease in which foreign currency is converted into domestic currency. FX markets, such as the New York Mercantile Exchange, match buyers and sellers to bring about speedy, orderly transactions. Rates

Buyers and sellers set prices using the auction method in the FX market. Sellers try to earn the highest "ask" price possible, and buyers try to purchase currency at the lowest "bid." Buyers and sellers meet at the "spot" price, the current value and exchange rate for a particular currency against others. Reserves

International governments enter the FX market to build and manage foreign exchange reserves. They build the reserves to make official payments and influence domestic currency values. International Trade

Businesses rely on FX markets to buy currency that is spent to obtain overseas goods. Corporations will also look to FX markets to convert international earnings back into the domestic currency. Hedging

Traders use foreign exchange derivatives, which "derive" their valuations and costs from the spot market. Options and futures contracts effectively lock in exchange rates for a set period, to hedge against the risks of currency fluctuations. Definition: Foreign exchange describes the process of converting domestic currency into international banknotes. Beyond providing a forum to execute currency transactions, foreign exchange markets are leading indicators for economic activity. Government officials monitor foreign exchange markets to devise effective policy and manage domestic commercial activity. Be advised that foreign exchange markets introduce distinct risks to the world economy. Instruments of Foreign Exchange Market

The instruments, with the help of which the international payments are effected. They are, 1. Cheques and Bank Drafts : Persons dealing with foreign exchanges can use bank cheques as well as bank drafts in order to make payments. The cheque is drawn on particular bank instead of a person. 2. Bills of Exchange : It is also called as foreign bill of exchange which is an unconditional order in writing addressed by one person to another. It mentions the person to whom a certain sum is to be paid either on demand or on specific date. 3. Mail Transfer (MT) : Under this, funds are transferred from one account of a destination to the another destination in the nation by mail. For international payments air-mail is used. 4. Telegraphic Transfers (TT) : By this method a sum can be transferred from one place to another place in the world by cable or telex. This is the quickest method of transferring fund from one place to another. Thus, these are various instruments / methods used for inflecting International payments.

3.3 Functions of the Foreign Exchange Market The foreign exchange market is the mechanism by which a person of firm transfers purchasing power form one country to another, obtains or provides credit for international trade transactions, and minimizes exposure to foreign exchange risk. Transfer of Purchasing Power: Transfer of purchasing power is necessary because international transactions normally involve parties in countries with different national currencies. Each party usually wants to deal in its own currency, but the transaction can be invoiced in only one currency. Provision of Credit: Because the movement of goods between countries takes time, inventory in transit must be financed. Minimizing Foreign Exchange Risk: The foreign exchange market provides "hedging" facilities for transferring foreign exchange risk to someone else. 3.4 Market Participants The foreign exchange market consists of two tiers: the interbank or wholesale market, and the client or retail market. Individual transactions in the interbank market usually involve large sums that are multiples of a million USD or the equivalent value in other currencies. By contrast, contracts between a bank and its client are usually for specific amounts, sometimes down to the last penny. Foreign Exchange Dealers: Banks, and a few nonbank foreign exchange dealers, operate in both the interbank and client markets. They profit from buying foreign exchange at a bid price and reselling it at a slightly higher ask price. Worldwide competitions among dealers narrows the spread between bid and ask and so contributes to making the foreign exchange market efficient in the same sense as securities markets. Dealers in the foreign exchange departments of large international banks often function as market makers. They stand willing to buy and sell those currencies in which they specialize by maintaining an inventory position in those currencies. Participants in Commercial and Investment Transactions:

Importers and exporters, international portfolio investors, multinational firms, tourists, and others use the foreign exchange market to facilitate execution of commercial or investment transactions. Some of these participants use the foreign exchange market to hedge foreign exchange risk. Speculators and Arbitragers: Speculators and arbitragers seek to profit from trading in the market. They operate in their own interest, without a need or obligation to serve clients or to ensure a continuous market. Speculators seek all of their profit from exchange rate changes. Arbitragers try to profit from simultaneous exchange rate differences in different markets. Central Banks and Treasuries: Central banks and treasuries use the market to acquire or spend their country's foreign exchange reserves as well as to influence the price at which their own currency is traded. In many instances they do best when they willingly take a loss on their foreign exchange transactions. As willing loss takers, central banks and treasuries differ in motive and behavior form all other market participants. Foreign Exchange Brokers: Foreign exchange brokers are agents who facilitate trading between dealers without themselves becoming principals in the transaction. For this service, they charge a small commission, and maintain access to hundreds of dealers worldwide via open telephone lines. It is a broker's business to know at any moment exactly which dealers want to buy or sell any currency. This knowledge enables the broker to find a counterpart for a client quickly without revealing the identity of either party until after an agreement has been reached.

The foreign exchange market performs mainly three functions

Transferring the purchasing power Provision of credit for foreign trade and Furnishing facilities for hedging for foreign exchange risks Transferring the purchasing power The most important function is the transfer of purchasing power from one country to another and from one national currency to another. The purchasing power is transferred through the use of credit instruments. The main credit instrument is used for the transferring the purchasing power is the telegraphic transfer (TT) of the cabled order by one bank (in country A) to its correspondent abroad (in country B) to pay B funds out of its deposit account to its designated account or order. The telegraphic transfer is simply a sort of cheque, which is wired or radioed rather than sent by post. Purchasing power may also be transferred through bank drafts. Provision of credit for foreign trade The foreign exchange market also provides credit for foreign trade. Like all the traders, international trade also requires credit. It takes time to move the goods from seller to purchaser and during this period, the transaction must be financed. When the exporter does not need credit for the manufacture of export goods, credit is necessary for the transit of goods. When the special credit facilities of the foreign exchange market are used, the foreign exchange department of a bank or the bill market is

used; the foreign exchange department of the bank or the bill market of one country or the other extends the credit facilities to finance the foreign trade.

Furnishing facilities for hedging foreign exchange risks The foreign exchange market by providing facilities of buying and selling at spot or forward exchange, enables the exporters and importers to hedge their exchange risks arising from change in the foreign exchange rate. The forward market in exchange also enables those banks, which are unlikely to run any considerable exchange position to cover their commitments.

Transactions in the Interbank Market (types of foreign exchange transactions) Transactions in the foreign exchange market can be executed on a spot, forward, or swap basis. Spot Transactions: A spot transaction requires almost immediate delivery of foreign exchange. In the interbank market, a spot transaction involves the purchase of foreign exchange with delivery and payment between banks to take place, normally, on the second following business day. The date of settlement is referred to as the "value date." Spot transactions are the most important single type of transaction (43 % of all transactions). Outright Forward Transactions: A forward transaction requires delivery at a future value date of a specified amount of one currency for a specified amount of another currency. The exchange rate to prevail at the value date is established at the time of the agreement, but payment and delivery are not required until maturity. Forward exchange rates are normally quoted for value dates of one, two, three, six, and twelve months. Actual contracts can be arranged for other lengths. Outright forward transactions only account for about 9 % of all foreign exchange transactions. Swap Transactions: A swap transaction involves the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates. The most common type of swap is a spot against forward, where the dealer buys a currency in the spot market and simultaneously sells the same amount back to the same back in the forward market. Since this agreement is executed as a single transaction, the dealer incurs no unexpected foreign exchange risk. Swap transactions account for about 48 % of all foreign exchange transactions.

Spot Market

These are the quickest transactions involving currency in foreign markets. These transactions involve immediate payment at the current exchange rate, which is also called the spot rate. The Federal Reserve says the spot market accounts for one-third of all currency exchange, and trades usually take place within two days of the agreement. This does leave the traders open to the volatility of the currency market, which can raise or lower the price between the agreement and the trade. Futures Market

As the name implies, these transactions involve future payment and future delivery at an agreed exchange rate, also called the future rate. These contracts are standardized, which means the elements of the agreement are set and non-negotiable. It also takes the volatility of the currency market, specifically the spot market, out of the equation. These are popular among traders who make large currency transactions and are seeking a steady return on their investments.

Read more: Types of Foreign Exchange Markets

So, who are these major FOREX players? There are basically 4 categories of foreign exchange market participants as follows: Market The Interbank - Central Banks / Federal & Foreign Governments Speculators Hedgers Market

So let's find out more about each of these groups of currency FOREX players. The Foreign Currency Transactions Act

Print this article According to the U.S. Office of the Comptroller of the Currency (OCC), the Currency and Foreign Transactions Reporting act is also referred to as the Bank Secrecy Act. It was implemented as an anti-money laundering, anti-drug trafficking tool.

1. Money Laundering

According to the OCC, money laundering is the use of legal financial institutions to hide the source of illegally obtained funds through a series of transactions. This act is designed, through a series of reporting requirements, to prevent this from occurring. Requirements

The OCC states that, according to the Act, banks are required to complete a Suspicious Activity Report (SAR) when certain red flags occur. They must also develop a program that monitors compliance through a system that includes internal controls and independent testing of compliance. What Should Be Reported

The OCC requires that a SAR be completed for the following situations: Insider abuse, regardless of amount, violations of federal law for $5,000 or more if a suspect has been identified or if money laundering is suspected, violations of federal law in the amount of $25,000 or more, regardless of whether a suspect has been identified.

Types of FEM:

Spot Market

These are the quickest transactions involving currency in foreign markets. These transactions involve immediate payment at the current exchange rate, which is also called the spot rate. The Federal Reserve says the spot market accounts for one-third of all currency exchange, and trades usually take place within two days of the agreement. This does leave the traders open to the volatility of the currency market, which can raise or lower the price between the agreement and the trade. Futures Market

As the name implies, these transactions involve future payment and future delivery at an agreed exchange rate, also called the future rate. These contracts are standardized, which means the elements of the agreement are set and non-negotiable. It also takes the volatility of the currency market, specifically the spot market, out of the equation. These are popular among traders who make large currency transactions and are seeking a steady return on their investments. Forward Market

These transactions are identical to the Futures Market except for one important difference--the terms are negotiable between the two parties. This way, the terms can be negotiated and tailored to the needs of the participants. It allows for more flexibility. In many instances, this type of market involves a currency swap, where two entities swap currency for an agreedupon amount of time, and then return the currency at the end of the contract. Participants

There are approximately five different types of entities that use the foreign exchange markets on a daily basis. Commercial banks are the leaders in this market and are the main source of currency transactions. Traditional users refer to entities that do business across national borders. Central banks are the official players in this market, and each country has a central bank to manage its money supply. Brokers work as go-betweens for banks, typically during large transactions. And, traders and speculators work to take advantage of short-term trends in the market.

The Speculators - FOREX Players Group #1 This is you, a FOREX beginner or currency trader - one of a group of four distinct foreign exchange market participants. Your mission if you choose to accept it, is to speculate in the buying or selling of foreign currency pairs...and through shrewd trading strategy, sound risk management and trading savvy...make a profit off of fluctuating FOREX currency rates at the end of a trade. Individual FOREX speculators like you make up a small but important part of the huge foreign exchange trading market. Speculators also include hedge funds. With what can often be massively sized financial portfolios which hedge funds manage, they look to earn equally large to massive returns off of their FOREX speculation efforts.

Because hedge fund speculators can wield such huge trade leverage in the market, are often a target for the Central Banks overseeing a countrys' monetary policy, who want to ensure their trading leverage doesn't cause unwanted ripples in that policy. An overview of this entire section including its two other parts can be found at FOREX Trading for Beginners.

The Hedgers - FOREX Players Group #2 Another of the Foreign Exchange Market Participants are large hedgers. These are large corporations with multi-national operations that span the planet. Think Proctor & Gamble, Coca-Cola, BASF, etc. Their worldwide operations entail numerous international financial transactions with various vendors in any number of countries. And that means having to deal with many different foreign currencies, all of which fluctuate day-to-day. An example of a large hedger could be a major global company like United Airlines. They need to have an ongoing supply of Jet-A or jet aircraft fuel to keep their planes flying and Jet-A is one of their largest ongoing costs. Airlines run on pretty thin profit margins, and they need to hold their costs, like fuel, down, to ensure profitablity. For example, if United is buying jet fuel from Canada, and paying in Canadian Dollars, and the Canadian Dollar was rising against the US Dollar, United could lock in a lower, current exchange rate today (via a futures contract) for fuel delivery 3, 6 or even 12 months out into the future. This group of foreign exchange market participants "hedge" or minimizing their risk of losing money against a rising Canadian Dollar. If the Canadian Dollar did rise against the US Dollar, and United not hedged, United would have incurred a higher cost, which could have had a negative impact on their thin profit margins. That's an example of how a corporate hedger might trade in the FOREX trading markets. The Interbank Market Major Forex Players Group #3 The third major foreign exchange market participant is a group of large commercial banks and other large financial institutions who make up whats called the Interbank Market. Interbank Market currency trading participants handle FOREX trade transactions with each other around the globe through electronic brokerage systems.

This Interbank market has a direct impact on what & how you as a speculator interact in trading the FOREX. How? The various foreign currency prices you as a trader see on trading platforms are the result of these large banks and financial firms' foreign exchange trading activity in the Interbank market as major foreign exchange market participants. Their activity sets the exchange rates/prices/quotes, as they buy and sell currencies at the bid/ask price throughout the day. Central Banks Big Foreign Exchange Participants Behind the Scenes The Central Banks are the fourth group of Foreign Exchange Market Participants that play in the FOREX space. In the USA, the Central Bank is the Federal Reserve, comprised of its 13 regional banks. In other countries it would be a similar Central Bank setup, serving that specific country and their government. We dont see or hear too much about Central Banks as they are more behind the scenes, and tend to work hand-in-hand with their countries government regarding monetary policy, etc. However, they exert a huge influence in when it comes to currency exchange. One of their main functions is monitoring and helping to set /adjust a countries monetary policy, helping keep watch over the money supply, interest rates, and other issues that can affect a countries economic growth, including inflation or deflation. You may remember when Allen Greenspan was the chairman of the US Federal Reserve, for what seemed like forever. His periodic announcements on the US monetary policy were awaited and held in such high regard and expectation on Wall Street and across the globe, that news coming out of his mouth could have a direct and sometimes dramatic impact in FOREX currency market movements, speaking on behalf of one of worlds most recognizable Foreign Exchange Participants. With the 2009 global financial crisis, it became crystal clear that serious financial issues can span the globe and not just be restricted to a single country. Thus, foreign government Central banks have taken a greater interest in working more collaboratively with on global monetary issues that affect the world community, so that a repeat of such a serious financial meltdown doesnt occur again. So, there you have ita short overview of the major foreign exchange participants. As noted earlier, you surely realize by now, that there is some incredible talent out there trading in the ultimate money game called FOREX.

That means, for you to have a chance at success against far more resource-driven and wellfunded Foreign Exchange Market Participants and competitors including some of the most brilliant mathematical and trading minds on the planet - you need to learn as much as you can to improve your currency trading success odds. Remember, the FOREX market doesnt care if you win or lose at trading. It will gladly take your money when you make mistakes, or it can pay you well when you trade smartly and in an unemotional and disciplined fashion. Continue to learn and soak up everything about FOREX trading and you could become a real FOREX playeror at the least, become a winning Foreign Exchange Market Participant. The Foreign Exchange Market is the best way to trade currency around the world. Known by the nickname Forex, more than 100 types of currency are traded each day and more than $3 trillion is exchanged daily. There are plenty of participants in the Forex, including those that serve investors, middle men for currency purchase and companies in need of international funds.

1. Banks

Banks participate in the Forex in order to manage the foreign exchange risks of their bank and their clients, according to Peter Pontikis, who writes for Forex Journal Magazine. They can also speculate in the market. Their main goal is to make profits through direct trade of currency and through managing their clients' trading positions. This gives the bank access to both the buying and selling interests of their clients. Brokers

Brokers in the Forex are the middle men between banks who trade currency on a daily basis. Their role is no different than a trader on the floor of the stock market. Brokers spend their day matching buy and sell orders between clients. Many of their functions are computerized, which means deals are done fast. Banks pay a fee to have these brokers handle their transactions. Central Banks

Pontikis writes that most developed countries have central banks, whose main role is to maintain the validity of the national currency. Central banks usually monitor and test prices on the Forex, and have a great deal of sway with banks, brokers and other players in the Forex market. The reason? Central banks print the money. For that reason alone, their opinions are always respected and rarely ignored. Corporations

When a corporation in the United States makes a purchase in France, that company must find a way to make that purchase in foreign currency. That's where the Forex comes in. The U.S. corporation uses the market to purchase the foreign currency they need to complete the transaction. Fund Managers

There are two types. The fund managers are money managers who deal in funds that amount to hundreds of millions of dollars. They invest that money across a range of investments and a diverse list of clients, including pensions, individuals and governments. Those who manage

hedge funds take bigger risks, as they're seeking to realize leverage potential and will exploit the use of derivatives, according to Pontikis.

Types of Foreign Exchange Rates

Throughout history, various international monetary systems and different types of foreign exchange rate regimes existed. They served to manage not only countries' domestic economic affairs but also international trade relations. Course material from the University of West Georgia points out everything from the gold standard and fixed rates to the fiat money and floating currencies. Foreign exchange rates have become ever more visible in the increasingly global economic environment and are very useful for both promoting trade and maintaining monetary stability.

1. Floating Rates
Floating rates are the main type of foreign exchange rates and the primary reason for currency fluctuations in foreign exchange markets. All major economies from developed countries allow the value of their currencies to float freely under market forces. Floating rates are preferable if a country's economy is strong enough to withstand the constant change in the value of its currency. For example, a country's currency may lose value in the foreign exchange market if trade deficit is causing weak demand for the currency and strong demand for foreign currencies. As a lower currency value is making imports more expensive and exports cheaper, both local and foreign buyers may switch their demand to the country's domestic goods and services. An economy that has the resources and means to meet the shifting demand can automatically adjust both foreign trade and domestic economic activities. Eventually the value of its currency can bounce back up.

Fixed Rates
The smaller economies of developing countries use fixed foreign exchange rates to promote trade and attract foreign investments. For example, by fixing its currency against the currencies of other countries, a country keeps export prices affordable to foreign buyers and accumulates trade surplus over time. Fixed currency rates also allow a country to assure foreign investors of the stable value of their investments in the country. However, under fixed rates, a country's monetary policies can become ineffective, especially when trying to stimulate domestic economic activities by consumers at home. Injecting more money into the economy would normally reduce a country's currency value against foreign currencies under floating rates. As imports become more expensive, consumers would gradually focus their demand on domestic products, potentially lifting up the economy. With fixed rates, however, the exchange value of domestic currency does not move and more money means more buying power for imports. Such an outcome does not achieve policy makers' intention to increase domestic demand.

Pegged Rates
Pegged foreign exchange rates are a compromise between floating rates and fixed rates. Under pegged rates, a country allows its currency to fluctuate within a fixed band around a periodically adjusted central value. Pegged rates are more appropriate for a transitioning, developing economy. They allow both stability and a certain degree of market adjustments. While no artificial exchange rates, fixed or pegged, can fix economic problems single-handed, they do provide an opportunity for growth. Countries hope that economic improvements can bring in the foreign currency reserves required to keep the stated rates. When an economy fails to produce the expected results, such a system cannot maintain the fixed value for long, according to Brigham Young University in "Fixed Exchange Rates vs. Floating Exchange Rates."

2. s

Central Bank: Every country of the world has a Central Bank, which is assigned the responsibility of maintaining external value of the domestic currency, and this is executed by interventions of the Central Bank.

Commercial Bank: These banks are the most active of all Forex market players and provide services for converting one currency to another. With wide network of branches, commercial banks buy foreign exchange from exporters and sell it to importers. Exchange Brokers: The extent, to which services of brokers, residing in other countries are utilized, is dependent upon the tradition and practices prevailing at a specific Forex market center. Locally based brokers can conduct Forex transactions as per the rules and regulations of the Forex governing body of their respective country. Overseas Forex market: The Forex market is a 24-hour market and the market day initiates with Tokyo and followed by Singapore, India, Bahrain, Frankfurt, Paris, London, New York, and Sydney before things are back with Tokyo the next day. Speculators: In order to make profit on the account of favorable exchange rate movements, speculators buy foreign currency if it is expected to appreciate and sell foreign currency if it is expected to depreciate. They follow the practice of delaying covering exposures and not offering a cover till the time cash flow is materialized.