Pipruit: Hmmn, I still can’t believe that all this currency, as you’ve said, almost $1.5 Trillion dollars of spot market are available for delivery. Are they really physically transferred from one bank to another, then to another one and so on? Commander in Pips: Actually, not. Note that 80% of all transactions on the FOREX market have a speculative nature. It means that the organization or person trading does not intend to take a real delivery of currency and just wants to gain profits from exchange rate fluctuations, basically on intraday trades. Pipruit: It sounds like you are talking about me. And why is this so important? Commander in Pips: Well, the highly speculative nature of the FOREX market tells us much about its specific properties meaning that: - It has huge liquidity – the trade volume, i.e. buying and selling, is really very large in any period of time; - This makes it very easy for anybody buy and sell currency at almost any time ; - For big companies and banks, great liquidity means that they can buy and sell large volumes of currency without any meaningful effect on the current exchange rate. At the same time, as we’ve discussed already, the liquidity can vary depending on what currencies you’re trading. In general, liquidity is higher for major pairs and lower for exotic. Also it can vary due to trading hours and other circumstances, but we will talk about it in another topic. Pipruit: Thanks a lot. Finally I have some idea about the real structure of the FOREX market. P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer them soon. Note: FPA ranks are earned in the battles against scam, not in the classroom.