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Emporio Trading - Explores the Role of Institutional Investors in Currency Trading

PORT VILA, VANUATU / ACCESSWIRE / May 23, 2018 / When the US dollar went off the gold standard and began to float against other currencies, the Chicago Mercantile Exchange began to create currency futures to provide a place where banks and corporations could hedge the indirect risks associated with dealing in foreign currencies. More recently, there has been a massive move away from currency futures to more direct trading by institutional investors in foreign exchange spot markets. Emporio Trading, a worldwide Forex market leader, recently discussed the role these traders play, and how they affect the casual investor.

The financial experts from Emporio Trading began by explaining the role of central banks, who are the main monetary authority in the majority of developed market economies. Their specific functions tend to be divers and can differ from country to country, but each bank's general duty is to facilitate government monetary policies and help smoothen out the fluctuation of the value of their currency. These financial institutions hold foreign deposits, known as reserves, as an asset to use in foreign-relation policies, repair debts and stabilize their currency. Eventually, these reserves will be used to intervene in the global Forex market. Central banks will interfere in the form of direct buying to push prices higher or selling to drive them down, but another tactic is to simply make a statement to the media. This strategy, known as jawboning, is often a sign to investors that official action will take place shortly.

However, not all participants have the power to influence market prices, and most traders must buy and sell according to the prevailing exchange rate. Businesses, institutional investors, and amateurs all fall into this category. Commercial traders - those compelled by the nature of their business to engage in capital transactions that require them to either purchase or sell foreign currency - use financial markets to offset risk and hedge their operations. Institutional investors, also known as non-commercial traders, are instead considered speculators that are trading in financial markets solely for capital gains. They often have increased assets and more data available than a casual investor, and as such can be looked to as an indicator of Forex trends. For example, although interest in Bitcoin has faded from the masses, increased action from institutional investors has analysts believing that the cryptocurrency market is headed in a healthy direction. In late February a Bitcoin whale investor purchased $335 million worth of BTC, the second such notable purchase to take place recently, signaling large investor confidence in crypto prospects along with a maturing market.

Emporio Trading is a world-class grade Forex company that is dedicated to educating clients on how to gather and implement the best information to improve their investment portfolios. Providing trading services to clients across Europe, Asia, and Latin America, Emporio Trading delivers competitive pricing, reliable trade execution, industry-leading server technologies and innovative trading tools.

EmporioTrading.com - Worldwide Forex Market Leader: http://emporiotradingnews.com

Emporio Trading - Analyzes Factors Affecting Commodities Markets: https://finance.yahoo.com/news/emporio-trading-analyzes-factors-affecting-040000525.html

Emporio Trading - Explains the Economy's Effects on Forex Markets: https://finance.yahoo.com/news/emporio-trading-explains-economy-effects-041800985.html

Contact Information:

EmporioTradingNews.com
contact@emporiotradingnews.com
http://emporiotradingnews.com

SOURCE: EmporioTrading.com

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