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Foreign exchange market is the mechanism by which purchasing power of a firm is transferred from one country to another, to obtain and provide credit for international trade, and also minimize exposure to foreign exchange risks. Foreign exchange market involves huge trading volume that represents the largest asset class in the world leading to high liquidity. Another advantage is that conducting business globally using foreign exchange market, you are provided with a platform to operate on a 24hour basis except on weekends. The market is also faced with some disadvantages due to fluctuations in interest rates that lead low margins of relative profits compared with other markets of fixed income. The market is also faced with the disadvantage of investors being needed to have a lot of capital to make good profits because there are low profit margines if the investor is a small cale.
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In common with other features, foreign exchange market is traded using a good faith deposit rather than a loan. The interest rate spread is an attractive advantage.
The market is unregulated, meaning there is no trade commission over seeing transactions and there is no restrictions on trade.
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