Forex

Foreign exchange market

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Foreign Exchange

Exchange Rates Currency band Exchange rate Exchange rate regime Fixed exchange rate Floating exchange rate Linked exchange rate

Markets Foreign exchange market Futures exchange Retail forex

Products Currency Currency future Non-deliverable forward Forex swap Currency swap Foreign exchange option

See also Bureau de change

The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. It is the largest financial market in the world, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. The average daily trade in the global forex and related markets currently is over US$ 3 trillion.^[1]

Market size and liquidity

The foreign exchange market is unique because of

• its trading volumes,
• the extreme liquidity of the market,
• the large number of, and variety of, traders in the market,
• its geographical dispersion,
• its long trading hours: 24 hours a day except on weekends (from 5pm EST on Sunday until 4pm EST Friday),
• the variety of factors that affect exchange rates.
• the low margins of profit compared with other markets of fixed income (but profits can be high due to very large trading volumes)
• the use of 'leverage' (where a small amount of money can be used to buy a large investment. I.e £10 with a leverage of 1:50 gives you £500 to invest. This gives the potential for much larger profits and, more importantly, larger losses).