Trading in other words also known as foreign exchange is the largest financial market in the world and is an area where the largest financial institution in the world is involved. Previously forex transactions were the greatest concern of large corporate houses, but when time changing the need for foreign currencies had run through corporate houses to individuals involving several types of international transactions. Although the volume of transactions and people involved in currency trade increases exponentially, there are still information asymmetry between investors and markets. Thus, to mitigate information asymmetry and to provide individual investors all the information needed, let’s look at some basic things need to be considered,
• Currency trading market vs. Other Markets: All other markets around the world hold regulatory authorities that keep records of each transaction that occur around it. But in the case of the currency market, there is no authority that regulates or mediators who maintain an examination of all transactions. Transactions between parties occur through a previous set credit agreement. This ad-hoc setting is known for providing institutional and individual liquidity requirements.
• Ipliatorial: Trade in the currency market is literally not involving any type of physical transfer. All transactions occur online without the involvement of physical currencies. All advantages and losses are calculated and danned with their respective currency accounts.
• Intermediation: in the currency market, there is no formal intermediation because there is no place for all types of brokers or agents. Because there are no intermediaries, there are no commission questions. All profits and losses are individualistic and are the result of their own actions.
Mentioned above are some basic aspects that everyone needs to know in the currency market to reduce information asymmetry and to avoid the risk of loss. In addition, above as we all know transactions in the currency market always occur in currency pairs. The value of pairing currencies is decided by the purchasing power of currencies in each market. There are a pair of certain currencies that are considered exotic in the world currency market and they,
• Euro / US dollar
• Japanese US / Yen Dollar
• British / US dollar pound
• AS / Swiss Dollar Franc
The currency mentioned above is the strongest economic currency in the world so that it makes them more valuable and expensive throughout the world. Not only this combination, every currency above in combination with other currencies of this pair is the highest volume trade in almost all foreign exchange markets.