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Traders in the foreign exchange market can obtain an advantage or two from its distinct features. In some situations, such details result in new information being absorbed over a longer period of time.

Let’s recall the unique characteristics of the currency market.

Trades are done over the counter, making it a global decentralized market. Technology links most areas or countries in the market. Also, currencies can be traded in numerous locations and there are many price quotations for a specific currency.

The forex market is open 24 hours a day and five days a week. Being the sole financial market that is almost open around the clock, market players can access differing price levels. Banks have currency trading desks that place orders either to speculate or cover commercial demand. Huge clients get prices, with a markup integrated in them, which depends on the extent of the transaction. Conversely, retail customers deal with bid/ask spreads that are way wider than offered in the interbank market.

Speculative dealings outmatch commercial positions. Several factors can be attributed to this fact but it is difficult to quantify its extent. Therefore, the market tends to be susceptible to new information. Any unexpected development will prod traders with speculative positions to reevaluate their initial traders and adjust them to integrate the new information.

On the other hand, speculators aim to maximize profit or minimize losses all the time. They can either close or keep that position at any give time. Developments in technology have made the transmittal of fresh information relatively instant, shortening reaction times in all financial markets.

Its stratified structure renders the major players a modest information edge over the smallest traders. Various variables impact exchange rates such as supply and demand fundamentals, current market conditions, and economic and political events. Hence, it will take a while for exchange rates to adjust to new information.