Mohammadreza Moghadasi is an Iranian entrepreneur who succeeded to flourish his ideas and talents by believing in himself. Of course, Mohammadreza sweated blood to achieve this level, where at the present, he is handling 53 different business tracks and making money north of what his peers dream to have. In this article, he talks about three different classes of Forex markets.
Three important types of forex markets are spot, forward, and futures.
Moghadasi started by stating that the spot market is the prompt currency exchange between customers and brokers at the present exchange rate. Much of the currency trading is performed in this way. He added: “The main players in the spot market are investments, commercials, and central banks, as well as brokers, dealers, and speculators.” Big commercial and investment banks build a significant part of spot trades, trading for themselves and their clients.
Mohammadreza introduced the second type offorward markets, where two parties arrange to trade a currency for a specified price and quantity at some future date. No finances are exchanged when the trade is commenced. These parties can be organizations, people, governments, and so on. Forward markets are practical for hedging. “Speaking of the drawbacks, forward markets lack centralized trading and are somewhat illiquid (since there are exclusively the two parties). There is also a counterparty threat, the other part will back out,” said Moghadasi.
Future markets are analogous to forward markets in terms of the main function. However, the actual contrast is that future markets employ centralized exchanges. Mohammadreza said: “Thanks to this feature, there are no counterparty threats for either party. This ensures that future markets are favorablyliquid, particularly in forward markets.”
Prominent Players in the Forex Market
The U.S. dollar is the most-traded currency by far. Euro is next in line, and the third is the Japanese yen. JPMorgan Chase is the biggest trader in the forex market. Chase holds 10.8% of the world’s forex market allocation. They have been the leading holder in the market for three years now. UBS is in second place, owning 8.1% of the market share. XTX Markets, Deutsche Bank, and Citigroup fill the remaining places in the top five.
