Foreign Exchange Market
Foreign Exchange Market
The foreign exchange market (also known as forex, FX, or the currencies market) is an over-the-counter (OTC) global marketplace that determines the exchange rate for currencies around the world. Participants in these markets can buy, sell, exchange, and speculate on the relative exchange rates of various currency pairs. Foreign exchange markets are made up of banks, forex dealers, commercial companies, central banks, investment management firms, hedge funds, retail forex dealers, and investors.
KEY TAKEAWAYS
- The foreign exchange market is an over-the-counter (OTC) marketplace that determines the exchange rate for global currencies.
- It is, by far, the largest financial market in the world and is made up of a global network of financial centers that transact 24 hours a day, closing only on the weekends.
- Currencies are always traded in pairs, so the "value" of one of the currencies in that pair is relative to the value of the other.