What is Forex ?

The Foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. It is by far the largest financial market in the world, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. The average daily trade in the global forex and related markets currently is over US$ 3 trillion.[1] Retail traders (individuals) are a small fraction of this market and may only participate indirectly through brokers or banks, and are subject to forex


The foreign exchange market is unique because of

* Its trading volumes,
* The extreme liquidity of the market,
* The large number of, and variety traders in the market,
* Its geographical dispersion,
* Its long trading hours: 24 hours a day (except on weekends),
* The variety of factors that affect exchange rates.
* The low margins of profit compared with other markets of fixed income (but profits can be high due to very large trading volumes)

According to the BIS ( Bank of International settlement), average daily turnover in traditional foreign exchange markets is estimated at $3,210 billion. Daily averages in April for different years, in billions of US dollars, are presented on the chart below:

This $3.21 trillion in global foreign exchange market "traditional" turnover was broken down as follows:

* $1,005 billion in spot transactions
* $362 billion in outright forwards
* $1,714 billion in forex swaps
* $129 billion estimated gaps in reporting

In addition to "traditional" turnover, $2.1 trillion was traded in derivatives.