Currency Exchange Market - Forex,
is an inter-bank or inter-dealer market that was established in the nineteen-seventies when floating exchange rates began to materialize. In addition, it is an Over-The-Counter (OTC) market, meaning that transactions are conducted between any two counter parties that agree to trade via the telephone or electronic network.
Therefore trading is not centralized, as is the case with many stock markets (i.e., NYSE, Nasdaq, CME) or as the case for currency futures and currency options, which trade on special exchanges. Dealers often "advertise" exchange rates using a distribution network.
Because of the above it is of the utmost importance that traders are using very well known trading partners (Companies).
The major dealing centers today are: London, with about 33% of the market, New York, with 25%, Tokyo, with 11%.
In terms of trading volume, the currency exchange market is the worlds largest market, with daily trading volumes soon reaching 2 trillion US dollars. The New York Stock Exchange has a daily trading volume of approximately $ 70 billion. The currency exchange market is by far the most liquid market in the world today.It is impossible for individuals or companies to affect the exchange rates. In fact, even central banks and governments find it increasingly difficult to affect the exchange rates of the most liquid currencies, such as the US dollar, Japanese Yen, Euro, Swiss Frank, Canadian Dollar or Australian Dollar.
The currency exchange market is a true 24-hour market, 5 days a week. There are dealers in every major time zone. Trading begins Monday morning in Sydney (which corresponds to 3 pm EST, Sunday) and then daily moves around the globe through the various trading centers until closing Friday evening at 4:30 pm EST in New York.
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