How big is the Forex Market?

The average per day volume of trade in the Forex market, as mentioned before, is a whopping $5.1 Trillion according to a 2016 report. That’s more than any other business/trade around, even the New York Stock Exchange, which has a daily turnover of $22.4 billion a day.

Ok, so that’s clearly a lot of business. Where exactly is this market and how can one access it? The answer to the first you probably already know as it was explained in Lesson 1 but to reiterate it here, it exists all over the world.

Some of the most active centers are located in London, New York, Tokyo, Singapore, Zurich, Hong Kong, Sydney, and Paris. Since these centers function in different time zones, it means that the market is open 24 hours. By the time the 9-5 shift ends in one place it has begun in another. It means that trading never actually stops. This goes on for 5 days a week.

In order to access it all you need is an account (this is where brokers and dealers come in), and an internet connection.

The ready accessibility of Forex as well as the lack of one solid office/center is because it is mainly an Over-the-Counter market, also known as ‘interbank’ market. This means that instead of a centralized exchange, the trade takes place through a broker or dealer with the help of some banks.

One main reason for this is that unlike stock exchange, in forex the traders are not betting on a company to do well. They invest in entire countries’ economies. These economies are affected by any number of factors for e.g. the interest rate at that time, or the political environment. So no one is accountable.

It is a free market that can take any turn at any time. Being this kind of an open market means there are fewer restrictions and rules as there is no one regulatory authority overseeing everything. It also means that brokers/dealers and all other players can be inventive with the way they earn their profits. Most things go.

Trading partners are chosen on the basis of history and the rates being offered (there are bid and ask prices, all will be explained later).

Now that you know what fx trading is mainly about and its background, we can move on to the technical part and perhaps a bit of the nitty gritty.

The first thing you need to know is how to read a quote. That is the basis of all trading, after all.

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