I think you forget that traders and financial institutions aren't the only ones in the forex market people need to buy specific currencies all the time to carry out normal business operations. There will always be people buying and selling currencies until the system crumbles.
Hi all,
I think you also need to remember that not everyone who transacts, is trading speculatively to profit. Indeed, the very big money often isn't.
Large institutions who have orderbooks to exchange currencies for their clients will have to do so at the best price available in current conditions.
i.e. say Volkswagon needs to exchange 300M Euros into USD to pay it's US staff? They instruct their bank to exchange the cash on a certain day, and expect this transaction to happen that day.
The institutional trader who's order book now has that order, will then have to feed this order into the market at the best price he can, but he or she isn't necessarily doing this to make a killing on the trade. He simply needs to transact for his client at the best prices available.
Just my 2c
I think you also need to remember that not everyone who transacts, is trading speculatively to profit. Indeed, the very big money often isn't.
Large institutions who have orderbooks to exchange currencies for their clients will have to do so at the best price available in current conditions.
i.e. say Volkswagon needs to exchange 300M Euros into USD to pay it's US staff? They instruct their bank to exchange the cash on a certain day, and expect this transaction to happen that day.
The institutional trader who's order book now has that order, will then have to feed this order into the market at the best price he can, but he or she isn't necessarily doing this to make a killing on the trade. He simply needs to transact for his client at the best prices available.
Just my 2c
- Look to the left, Trade to the right
- I am the system
- #25
- Jul 18, 2012 12:05am Jul 18, 2012 12:05am
Hmm, interesting points.
But I suppose the gist of it all is "where does the profit come from?"
(also lets assume "everyone" = >50%)
If the speculative market is positioned in such a way that I.e. the sellers are holding I.e. 20,000 lots on the short side and the buyers are holding only 10,000 lots on the long side - in the event of downwards capitulation (redundant, i know where does the short crowd get their profits from?
Its late and I cannot formulate this any better, hopefully someone will chime in....
lastly....perhaps I'm wrong to assume that the speculative spot fx market is not zero sum?
But I suppose the gist of it all is "where does the profit come from?"
(also lets assume "everyone" = >50%)
If the speculative market is positioned in such a way that I.e. the sellers are holding I.e. 20,000 lots on the short side and the buyers are holding only 10,000 lots on the long side - in the event of downwards capitulation (redundant, i know
where does the short crowd get their profits from?Its late and I cannot formulate this any better, hopefully someone will chime in....
lastly....perhaps I'm wrong to assume that the speculative spot fx market is not zero sum?
