What is the Forex market

Forex means foreign exchange and it is a market where one currency is traded for another. It is the largest financial market in the world and includes trading between banks, currency speculators, large corporations, governments and other financial institutions. In this market the average daily trade is over US$ 3 trillion. Individual traders are a small fraction of this market and can only participate indirectly through brokers, who charge a small fee, usually called "spread".

The foreign exchange market has some characteristics which makes it unique:

• the extreme liquidity of the market
• the large number and variety of traders
• its geographical dispersion,
• long trading hours: 24 hours a day (except weekends and holidays)
• the large variety of factors that affect exchange rates

The most traded products in the forex market are:

• EUR/USD: 28 %
• USD/JPY: 18 %
• GBP/USD: 14 %
  

The foreign exchange market is largely dollar-centered: the US currency is involved in 88% of transactions, followed by the euro (37%), the yen (20%), and the sterling (17%).