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The Unique Foreign Exchange Market

The Unique Foreign Exchange Market

The foreign exchange market is unique for a number of reasons. So much so that economists have said that it most closely mirrors the financial markets 'Nirvana' of a system of perfect competition. So what is it that makes it unique? Firstly, it has extraordinarily high liquidity. This is on account of a huge trading volume or many individuals and corporations around the world trading in currency every microsecond.

To know about foreign exchange, you can hop over to this site true value of the currency is very accurately represented in the price you see rolling at the top of your monitor. This is different from other less liquid or 'tradable' assets such as tulip tubers in Amsterdam, slaves in the Côte d'Ivoire or a little wooden house in the Midwest America.  

Incidentally, all of the above have been responsible for financial meltdowns on account of their value being inaccurately predicted because people were not actually buying or selling them but gaming on their future worth. Currency is not like this as we buy and sell it all the time so know its true value.

Another factor is the global dispersion of the currency exchanges. There are no international boundaries and in fact, traversing international boundaries is the whole point of the currency exchange. Therefore systems have been put in place to facilitate the smooth cross-border transfer of currency like no other commodity. 

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