Carl Young of Johnson City TN: Prices in Foreign Exchange Markets

Carl Young of Johnson City, TN is a day trader who has an interest in market conditions and foreign exchanges.

If you break down any financial market into its basic parts, you will find that there are only two factors that drive the prices. They are risk and return. Higher risks come with higher returns and lower risks come with lower returns. This is what creates the constant flow of money between different assets.

Money flows into forex markets when assets in different countries in other markets are being bought and sold and the proceeds are converted into cash. Foreign exchange is also the market where governments and banks buy and sell their cash. Forex market is managed by a small number of very big and powerful banks, who together control close to eighty percent of the market. For example, Deutsche Bank has around twenty percent of forex market share. UBS has twelve percent and Citigroup has eleven. 

There is no central exchange, which means that essentially, the big banks run the market. They create wholesale prices that brokers, dealers, resellers and traders then use. There are regulations that apply to the banking practices of the banks, but there are no regulations that apply specifically to the forex market. 

While big banks can manipulate price and use news and many other kinds of tools to move the prices up and down, they can’t hide the volume of the transactions in the marketplace. Fundamentally, market volume is the same as market activity. If you can see a lot of activity when a price goes up or down, you know the activity is genuine. When you look at the combination of volume and price, you will be able to see what the big banks are doing themselves just like Carl Young of Johnson City,TN sees.