The foreign exchange market, commonly known as the forex or FX market, is a global decentralized or over-the-counter (OTC) marketplace where currencies are bought, sold, and exchanged at current or predetermined prices.
It determines the exchange rates for currencies worldwide and facilitates the conversion of one currency into another, supporting international trade, investment, and financial transactions.
Key features of the forex market include:
- Decentralization: There is no single centralized exchange; trading occurs electronically over computer networks linking participants globally.
- 24-Hour Operation: The market operates continuously, 24 hours a day during weekdays, across major financial centers such as London, New York, Tokyo, and Sydney.
- Largest Financial Market: With daily trading volumes exceeding $7 trillion, it is the most liquid and largest financial market in the world.
- Participants: The market includes banks, central banks, investment firms, hedge funds, corporations, brokers, and individual traders.
- Currency Pairs: Currencies are always traded in pairs (e.g., EUR/USD), and prices are determined by supply and demand for each currency relative to another.
