The foreign exchange market is the market in which currencies are bought and
sold against one another. People may loosely refer to this market under
different labels, including foreign exchange market, forex market, fx market or
the currency market.
The foreign exchange market is the largest market in the world, with daily
trading volumes in excess of $1.5 trillion US dollars. All transactions
involving international trade and investment must go through this market because
these transactions involve the exchange of currencies.
It is the most perfect market that exists because it has a large number of
buyers and sellers all selling the same products. There is a free flow of
information and there are little barriers to participate.
The currency exchange market is an over-the-counter (OTC) market which means
that there is not one specific location where buyers and sellers can actually
meet to exchange currencies. Instead, transactions are conducted by phone, fax,
e-mail or through the websites of brokers who specialize in currency trading.
