Hi,
I have a couple of simple questions that have been nagging me:
1. How are the prices of currency pairs determined? Is it by the amount of people trying to buy versus the amount trying to sell?
2. Is FOREX the only international currency market? Are all currency trades required to go through FOREX?
3. When a large bank in Spain (for example) trades millions of EUR for USD are they required to do it through FOREX? If not, how does FOREX find out about the trade?
4. Imagine this scenario: Everyone in the world (literally) uses the same automated trading robot. The robot tells everyone to sell USD and buy EUR. From what I understand this would mean that the price of USD would fall to $0 and the price of EUR (as compared to USD) would rise to infinity. Then, when the robot tells everyone to sell EUR, everyone would profit. Obviously this cannot be so. If someone profits it is at someone else's expense; is it not? If this question is unanswerable with the pretense of every single person making these transactions simultaneously, then pretend it is 90% of the world instead of 100%.
I await your input Thanks a lot!
I have a couple of simple questions that have been nagging me:
1. How are the prices of currency pairs determined? Is it by the amount of people trying to buy versus the amount trying to sell?
2. Is FOREX the only international currency market? Are all currency trades required to go through FOREX?
3. When a large bank in Spain (for example) trades millions of EUR for USD are they required to do it through FOREX? If not, how does FOREX find out about the trade?
4. Imagine this scenario: Everyone in the world (literally) uses the same automated trading robot. The robot tells everyone to sell USD and buy EUR. From what I understand this would mean that the price of USD would fall to $0 and the price of EUR (as compared to USD) would rise to infinity. Then, when the robot tells everyone to sell EUR, everyone would profit. Obviously this cannot be so. If someone profits it is at someone else's expense; is it not? If this question is unanswerable with the pretense of every single person making these transactions simultaneously, then pretend it is 90% of the world instead of 100%.
I await your input Thanks a lot!