Does retail fx provide any macro economic benefit, or is it just traders swapping money on speculation?
I believe as in all market, more traders smooth out prices. Therefore FOREX smoothes out exchange rates and makes them more predictable. Not, that in FOREX pairs where there is not a lot of volume, the exchange rates can make radically changes, which hurts all markets dealing with those currencies.
retail fx is usually traded trough spot that infact has no consequences at all for rates since u are tradin' trough a dealin' desk...liquidity is fake 'cause its the broker that takes the opposite side of every your transaction; of course if u refer to currencies futs that its another matter....but then it aint fx innit.
Bitstream> The retail dealers then hedge their exposure in the general market. So yes, retail trader do indeed provide liquidity to the markets. Speculation is important to the markets as it provides liquidity. Most people don't understand the concept and value of liquidity but it is as important as anything out there. The invisible hand is at work in the markets.
yeah, but that's indirect and negligible since retail transactions are rarely hedged, only the biggest and potentially dangerous ones.
Actually most ones I know try to match their trades internally and then hedge excess risk externally through a liquidity provider. Regardless, someone is taking the risk and creating liquidity as two parties make their transactions.
kk then, binary options provide liquidity as well, like cfds, spreadbettin' do, nevermind other otc, and are as much as popular as fx. moot imo.