The Foreign Exchange Market which is also called as the Forex or the Fx market is a huge financial market with daily market volumes of $3-4 trillion. The Forex market is the largest and most liquid financial market in the world.
Forex Market History
The Forex Market began during the 1970s after 30 years of government restrictions regarding the foreign exchange transactions. The Forex market began after the end of the Bretton Woods Agreement which actually became a global monetary system for 30 years. The Forex market was born as the world's major countries gradually switched from fixed currency rates (Bretton Woods) to floating exchange rates.
Forex Market Characteristics
(1) The 24-hour operation, 5 days per week (Operating from Sunday 20:15 GMT to Friday 22:00 GMT)
(2) Enormous liquidity, tight spreads
(3) Wide geographical distribution (London in the largest Forex center in the world)
(4) Low margin requirements and very high capital leverage
Forex Market Participants
There are many different participants in the Forex Market:
1) Central Banks
2) Commercial Banks
3) Global Trade Companies
4) Forex Brokers
5) Institutional Investors
6) Retail Traders