The forex trading market is the only financial market that is open 24/7, unlike other markets like equities.

What is Forex Market and Forex Trading

The Forex market is the largest market in the world. The Forex market, also known as Foreign Exchange or FX, currency market is accessible to everyone seven days a week, 24 hours a day. In terms of volume, value, and liquidity, the foreign exchange, Forex market or currency market, is significantly larger than all other trading markets in the world. Unlike stocks, commodities, or any other form of derivative tool, the primary element of Forex trading is the currency of a certain nation.

United Kingdom, U.S.A. and Singapore are the three largest and most important markets for Forex trading. Central banks, larger multinational banks, financial institutions, and retailers from all over the world are the main participants in the forex trading. Although Forex trading is available 24 hours a day, every day of the week save the weekend, New Zealand leads Australia, the Middle East, Asia, Europe, and America in terms of timing.

By speculating on news, events, or any fundamental shift that takes place throughout the world on a specific trading day, any trader can trade on any currency at any time of the day. The most appealing characteristic of forex trading is the enormous volume and liquidity it offers traders every second, erasing geographic barriers.

The price at which one country’s currency is set against another country’s currency for trading on the Forex market is known as the currency exchange rate at a particular moment. When betting on buying or selling in the foreign currency market, a trader can only speculate on the exchange rates of a pair of two nations. The degree of currency swings and trends vary and is influenced by a number of factors, including supply and demand as well as global news and events that are specific to a given country on a particular day.

The value of other currencies affects a country’s exchange rate on the Forex market. Countries typically work together to resolve bilateral trade settlements that are determined by the exchange rates between the nations.

Example of Currency Pair in Forex Trading

Since the U.S. dollar is recognized as the standard for all international transactions, other countries’ currencies are always expressed in terms of the U.S. dollar. As an illustration, the acronym USD/INR stands for the exchange rate between the U.S. dollar and the Indian rupee. With the use of the pair USD/INR on a specific day, the value of the rupee is stated or calculated in terms of dollars. We can simply determine how many Indian rupees are required to purchase one U.S. dollar if we have the USD/INR exchange rate for a specific period of time. For instance, if the USD/INR exchange rate is 82, it means that 82 Indian rupees must be spent in order to purchase one US dollar.

Why is Forex Trading Unique

• It offers tremendous volume and liquidity unlike stock market and commodity markets. When placing orders, buyers and sellers don’t have to worry about volume or liquidity at  any time of day or night.
• Since it is accessible from everywhere in the world at any time, trading is not impacted by geographic barriers.
• Except on weekends, it is open every day of the week, 24 hours a day.
• In contrast to equity or commodity brokers around the world, forex brokers offer traders higher margin and leverage, which allows traders to make more money with a less investment.
• Because the forex market is sensitive to many global influences, it is difficult to manage or manipulate.
• In the equity market, price control by participants or operators is a common occurrence, but because millions of traders are simultaneously accessing the platform from across the world, it is impossible for one group or gang of operators to control the price in the forex market.

Trading Size of The Forex Market

The FX market is the biggest market in the world. The global equity and futures markets are dwarfed by the FX market, which has an average daily turnover of over $7 trillion. London dominates the market in Europe, while Singapore, Hong Kong, and Japan are the top three contributors to the growth in global Forex trading volume. The top three contributors to the volume of worldwide Forex trading are the United Kingdom, the United States, and Singapore, with the United Kingdom accounting for 43.1% of the total volume in the world. The three most popular currency pairs are USD/EUR, USD/JPY, and USD/GBP, and US dollars account for 88% of all forex transactions worldwide.