Interbank Market

The Interbank Market is the market for currencies for Foreign Exchange - the international market for currencies. The Interbank Market is the largest market in the world dealing in about $1.9 trillion daily turnover (according to a survey back in 2004).

The Interbank market allows traders to speculate on movements in the value of currencies. For example of you felt that the Euro were to go up against the US Dollar, you could turn to a market maker in the Forex market to take a position and buy the EURUSD currency pair.

In more laymen terms , traders are able to BUY a currency pair or SELL a currency pair. When you BUY the currency pair, you profit as the price goes up and lose as the price goes down. When you SELL the currency pair, you profit as the price goes down and lose as the price goes up. You can buy or sell any currency at any time, and thus can profit (and lose) in any economic situation.

Market Structure - Unlike equities or futures markets, in FX there is no central exchange where all trades are cleared. Instead the foreign exchange market is network of thousands of banks interconnected electronically, making FX an Over the Counter (OTC) market trading in practically every international financial center.

Market Hours - Because the Forex Market is not restricted by exchange hours and traded across the globe, the Foreign Exchange market is available for trading 24 hours a day. This makes it attractive to those traders seeking market liquidity that traditional equity and futures markets lack.

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Keywords:

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