currency trading
If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the "line" the amount of money with which they are trading. The top tier interbank market accounts for 51% of all transactions. From there, smaller banks, followed by large multi national corporations which need to hedge risk and pay employees in different countries, large hedge funds, and even some of the retail market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s. ” 2004 In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size”.
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Also, the fact that good Forex trading systems have been thoroughly tested gives trader a great amount of confidence going forward.
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If a trader loses all his money by paying spreads assuming he doesn't win or lose a single pip during his trading sessions until he goes bust, a market maker would take all the trader's money.
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currency trading