Foreign exchange trading is all about exchanging currencies in a highly decentralized over the counter market.

1. Foreign Exchange Trading Involves Trading of Two Currencies of Two Nations
Foreign exchange trading is all about exchanging currencies in a highly decentralized over the
counter market. The trades can be placed either through on line Forex trading or a broker or
market maker. Best Forex trading is the one which can bring you good amount of money at the
best foreign exchange rates. In an on line foreign exchange trading, orders can be placed with just
a few clicks and the broker then passes the order along to a partner in the Interbank Market to fill
your position.
When you close your trade, the broker closes the position on the Interbank Market and credits your
account with the loss or gain. This can all happen literally within a few seconds. Being the most
liquid and one of the most complicated of the markets, the foreign exchange market also stands for
a bit complex process of foreign exchange trading. Though, it can be managed with a few clicks of
the mouse, the understanding and the efforts involved in it are often complex and need to be
handled with care.
Traders include large banks, central banks, institutional investors, currency speculators,
corporations, governments, other financial institutions, and retail investors. There is no unified or
centrally cleared market for the majority of foreign exchange trading, and there is very little cross-
border regulation. Also, it is over-the-counter or on line foreign exchange trading, therefore there
are a number of interconnected marketplaces where different currencies instruments are traded.
This implies that there is not a single exchange rate but rather a number of different rates (prices),
depending on what bank or market maker is trading, and where it is. In practice the rates are often
very close, otherwise there are chances of misuse or abuse. Best Forex trading is possible only
when one knows about the fluctuating nature of the market. Fluctuations in exchange rates are
usually caused by actual monetary flows as well as by expectations of changes in monetary flows
caused by changes in gross domestic product (GDP) growth, inflation, interest rates, budget and
trade deficits or surpluses, large cross-border M&A deals and other macroeconomic conditions.