What is Foreign Exchange Market
Posted by Santu amin
Foreign Exchange is a currency market where the trading of one currency against
another takes place. It is often referred to as Forex or FX.
The foreign exchange market is the largest most liquid and most influential market in
the world. It is a truly 24 hour global market, it trades from 9pm GMT Sunday until
10pm GMT Friday and trades in excess of $1.5 trillion dollars a day, Making it far
bigger than the combined total of all the worlds stock exchanges.
Participants in Forex include central banks, corporations, individual investors and
speculators, and hedge funds. With the advent of electronic trading platforms,
self-directed investors and smaller financial firms now have access to the same
liquidity as larger market participants.
Trading, or speculation, makes up 95% of the daily volume. The other 5% of daily
volume consists of governments and commercial companies converting one currency into
another from buying and selling goods and services.
51% of the market is in spot FX transactions, followed by 32% in currency swap
transactions. Forward outright FX transactions represent another 5% of this daily
turnover. Options on inter-bank FX t