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Foreign Exchange Dealing Room - Essay Example
The foreign exchange is the value of the currency of one country determined in the currency of another country. It can also be defined as the relative price of two different currencies.
"The foreign exchange market is not a physical institution where the traders meet, transactions are made by telephone and computer rather than face to face" ( Winters Alan, 1991).
According to the world- wide central banking organization which is the Bank for International Settlements, the amount of daily trading done in the forex market is more than three trillion US Dollars. Thus the trading amount is so much that it is much larger than all of the US stock markets taken together. Here, trading from the whole world is done with or without the involvement of hard cash.
The trading begins in Sydney everyday, and moves first to Tokyo followed by London and then New York as the business day start in every financial sector. The exchange rates are shown around the world continuously on the computer.
The trading takes place when any trader quotes a price for any currency on his machine, and then anyone in the word willing to trade at that particular price can reply to that message and trade. ...