Forex Trading and the Need of Information Edge

Forex market is unique in many senses. The facts that there are no centralized exchanges showing single price quotes, no geographical limits and continuous trading make forex trading far different from trading most other financial instruments. Interestingly, forex market can’t be considered as a total commercial trading market as the major part of the trading volume is for interbank foreign exchange deals and central bank interventions to control currency exchange rates.

The interbank forex market is characterized by very large position sizes, high trading volumes and tightest bid/ask spreads that beat any broker spreads. Also this interbank market always has an information edge over retail market. For example most of the interventions by central banks to control their currency prices are covert and swift. Only the major banks who are trading against the central bank can know the bid/ask spread, trading volume and the intention of the buyer. So they will surely have an information edge over other players especially small traders who have either long or short open positions for the currency in discuss.

The need of information edge and the need of swift communication methods are always necessary in forex trading. There are always high chances of uncertainty as most of the times the retail traders won’t have any idea about the intensions of central banks or major participant banks when the trades are happening. So imminent bid/ask price changes necessitate instantaneous adjustments. Having access to up-to-date market happenings can help you in catching up the opportunities or to avoid greater risks especially you are trading greatly on margin. So when choosing the online forex broker in Dubai, one of the things you should consider is getting this information edge.