What is the purpose of FOREX and stock exchange trading (brief and deep explanation)?

May 26, 2010 - 9:15 am 2 Comments

how does transactions made by traders affect directly and indirectly on the market ?

Quite simply it is a market to facilitate the exchange of product — in this case financial securities and currency (forex).

Think of a traditional flea market, swap meet or public bazaar reorganized into a Wal-Mart Shopping Center or a Mega Mall. In theory, the exchanges bring together all operators into a single place and then "force" them to trade goods under a specific set of rules and publish all trades in a public venue for everyone to see. At Wal-Mart everyone pays the same price and everyone gets to see that price upfront. At the Mega Mall everyone knows which stores allow negotiation, sales, & price variations and which stores do not. At a traditional bazaar everything is negotiable and you might get a very different price for the exact same item sold 5 minutes before at the same shop.

Exchanges are also generally heavily regulated by the countries in which the operate…often requiring significant front end and back end reporting by every legal entity operating within the exchange.

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2 Responses to “What is the purpose of FOREX and stock exchange trading (brief and deep explanation)?”

  1. MVD34 Says:

    Quite simply it is a market to facilitate the exchange of product — in this case financial securities and currency (forex).

    Think of a traditional flea market, swap meet or public bazaar reorganized into a Wal-Mart Shopping Center or a Mega Mall. In theory, the exchanges bring together all operators into a single place and then "force" them to trade goods under a specific set of rules and publish all trades in a public venue for everyone to see. At Wal-Mart everyone pays the same price and everyone gets to see that price upfront. At the Mega Mall everyone knows which stores allow negotiation, sales, & price variations and which stores do not. At a traditional bazaar everything is negotiable and you might get a very different price for the exact same item sold 5 minutes before at the same shop.

    Exchanges are also generally heavily regulated by the countries in which the operate…often requiring significant front end and back end reporting by every legal entity operating within the exchange.
    References :

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