Foreign Exchange Market
The foreign exchange market, also known as the Forex or FX market, is the largest financial market in the world. It is a global decentralized market for the trading of currencies. This market determines the foreign exchange rate. It includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of trading volume, it is by far the largest market in the world, followed by the Credit market.
History of the Foreign Exchange Market
The foreign exchange market has its origins in the ancient times when people exchanged goods and services for other goods and services. The modern foreign exchange market began forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed per the Bretton Woods system. The foreign exchange market is unique because of its huge trading volume, representing the largest asset class in the world leading to high liquidity; its geographical dispersion; its continuous operation: 24 hours a day except weekends, i.e., trading from 22:00 GMT on Sunday (Sydney) until 22:00 GMT Friday (New York); the variety of factors that affect exchange rates; and its low margins of profit compared to other markets of fixed income.
Table of Comparisons
| Market | Size | Liquidity | Margins |
|---|---|---|---|
| Foreign Exchange | Largest | High | Low |
| Credit | Second Largest | Medium | High |
Summary
The foreign exchange market is the largest financial market in the world. It is a global decentralized market for the trading of currencies. This market determines the foreign exchange rate. It includes all aspects of buying, selling and exchanging currencies at current or determined prices. It is by far the largest market in the world, followed by the Credit market. For more information about the foreign exchange market, you can visit websites such as Investopedia, Bloomberg, and the Bank for International Settlements.
See Also
- Currency Exchange
- Foreign Exchange Rate
- Currency Trading
- Currency Pair
- Forex Broker
- Forex Trading
- Forex Market Hours
- Forex Trading Strategies
- Forex Trading Platforms
- Forex Trading Signals
