20 години печелим заедно
Foreign exchange markets offer various instruments for foreign exchange trade that accommodate the needs of a wide range of participants: banks, insurance and investment companies, pension funds, trade corporations and companies. The diversity of financial instruments allows investors, including so-called day traders, to manage their portfolios.
Spot transactions
Spot foreign exchange market is the most liquid market in the world with the total average daily turnover of more than $1.6 Trillion. A spot foreign exchange transaction is an exchange of one currency against another at an agreed rate, settlement of which takes place two working days later. For example, if trader buys USD 50,000 on Monday, settlement will take place on Wednesday. This is the most liquid market which often is accepted as a key foreign exchange market. Internet trading systems give access to this market.
Forwards
Except spot forex transactions in the global foreign exchange trading there are also transactions, settlement of which takes place at some fixed or open date in the future. These are so-called Forward transactions. They are used to fix a rate today for a transaction to be settled at some fixed or open date in the future. Thus companies can plan the settlements of their trade operations. These transactions are used mainly for hedging the risk of abrupt movements in the value of a currency pair. Forward rates always move to a level that shows the interest rate divergences.
Foreign exchange options
A foreign exchange option is an arrangement in which a seller (the option issuer) and a purchaser (the client) agree that the option seller is OBLIGATED to buy or sell some currency against another currency on strike price at expiry date. The purchaser is given the RIGHT, but not the obligation to buy or sell the currency on the price given in the option and pays an upfront premium to the seller. Thus, at expiry date the purchaser has an opportunity to exercise or not to exercise his right given in the option contract.