Foreign exchange is referred to as forex, or FX in short. The FX market is a marketplace where you can engage in trading or exchange of currencies. It operates as a decentralised over-the-counter market (OTC), with no actual physical central exchange. Commodities, stocks, debt securities and derivatives are just a few of the securities that can be traded in OTC markets.
The foreign exchange (forex) market is the largest financial market globally, and comprises banks, commercial companies, central banks, investment management firms, hedge funds, retail forex brokers, and investors. Trading in the forex market takes place through phone and electronic communication networks (ECNs) in various markets across the world, rather than at a single central location.
The forex market remains open 24 hours a day, 5 days a week and is closed on weekends from 12 a.m. on Friday to 12 a.m. on Sunday. There are three main sessions during a normal forex trading day. Beginning at approximately midnight (GMT+2) when the Sydney and Tokyo markets open, we move into the Asian session which lasts until the start of the European session at around nine o’clock in the morning as Frankfurt opens, followed a bit later by London. The American session starts later as the New York stock exchange opens and lasts until midnight when the following Asian session is scheduled to begin. This setup ensures that there is always at least one open forex market for trading, with occasional overlap between some markets.
The FX market is the largest in the world, with a daily turnover of around 6.6 trillion US dollars in recent years. This huge trading volume presents a wealth of trading opportunities each day.
