The Foreign Exchange market, also referred to as the "Forex" or "FX" market, is the largest financial market in the world, with a daily average turnover of approximately US$1.5 trillion. Forex trading is the simultaneous buying of one currency and selling of another. The world's currencies are on a floating exchange rate and are always traded in pairs, for example Euro/Dollar or Pound/Franc.
Forex Trading is not centralized on an exchange, as it is within the futures markets. The forex market is considered an Over the Counter (OTC) or 'Interbank' market, due to the fact that forex transactions are conducted between two counterparts over the telephone or via an electronic network.
The forex market is called an 'Interbank' market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. However, the percentage of other forex market participants is rapidly growing, and now includes large multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators.
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10/03/2010
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