THE FOREX MARKET

The size and volume Major currencies Over the counter market Electronic trading system(Reuters Dealing 2000,Electronic broking) Official market reporting companies(Reuters,Bridge information systems,Telerate etc.) New technologies(Interpreter 6000, Voice recognition systems etc.

STRUCTURE
Retail market(Travelers and tourists) The wholesale or Inter-bank market(Commercial banks,investment institutions,non-financial corporations,central banks) Primary price makers (quoting,position) Tiering among primary price makers Secondary price makers(Restaurants,hotels,shops catering to tourists)

The price takers The brokers Storing and transmitting information,keeping confidentialities,go by commissions,do not buy or sell in their account Speculators Types of transactions Settlement date or value date,Dealing locations,settlement location,spot rate,forward rate and swap transactions. Broken date or odd date transactions Short date transactions

Exchange rate quotations

Code of currencies. USD -Us Dollar INR- Ind.Rs GBP -British pound EUR- Euro JPY -Japanese Yen IEP-Irish pound CAD -Canadian Dollar CHF-Swiss Franc DEM-Deutschemark AUD-Austr.Dollar NLG -Dutch Guilder SEK-Swedish Kro. FRF -French Frank BEF-Belgian Franc ESP -Spanish peseta ITL-Italian Lira

Spot rate quotations

European quote American quote Direct quote Indirect quote Inter bank quotations Conventions by ACI (Association Cambiste Internationale)
USD/CHF GBP/JPY

Base currency, Quote currency,Bid Price,Offer Price or Ask Price

Examples
USD/CHF Spot : 1.4550/1.4560 GBP/EUR Spot : 1.3025/1.3035 Quotations in inter bank markets are given in five or six significant digits or four decimals. The last digit corresponds to 1/10,000th unit of the quote currency The last two digits are called Points or Pips The difference between the bid and the offer rate is called Bid Offer spread

Quotations European quote EUR 1.0275 per USD American quote USD 0.4575 per EUR Direct quotes Direct quotes are those that give units of the currency of that country per unit of foreign currency Indirect quotes(Reciprocal or inverse) Number units of a foreign currency per unit of home currency.