Trading in currency in other words also known as foreign exchange is the world’s largest financial market and was the area in which world’s largest financial institutions were involved. Earlier the Forex transactions were of biggest concern of the big corporate houses, however as the time changes the need for foreign currency has made its way through corporate houses to individuals who are involving in some sort of international transactions. Though the volume of transactions and the people involved in currency trading is increasing exponentially, still there is an information asymmetry between the investors and the market. Thus, to mitigate the information asymmetry and to provide the individual investor all the required information, let’s look at few basic things need to be paid attention,
• Currency trading market Vs other markets: All the other markets in the entire world are having a regulating authority who keeps a note of every transaction happening within their vicinity. But in case of the currency market, there is no such regulating authority or mediator who keeps a check of all the transactions. Transactions between parties happen through pre-arranged credit agreements. These ad-hoc arrangements are known for providing liquidity requirements of the institutions and individuals.