The Forex market is the largest financial market in the world, trading volume of more than USD6 trillion a day. Trading in the Forex is not done at one central location but is conducted between participants through electronic communication networks (ECNs) and phone networks in various markets around the world.

The Forex market is open 24 hours a day, 5 days a week from 5pm EST on Sunday until 4pm EST Friday. The reason that the markets are open 24 hours a day is that currencies are in high demand. The international scope of currency trading means that there are always traders somewhere who are making an meeting demands for currency.

There are many players in the Forex market

a) Banks
Banks all over the world trade currency with each other. There is an interbank market and that is where overwhelming majority of Forex Trading takes place. These banks trade with each other through electronic networks. The larger banks account for a tremendous percentage of the total amount of currency trades in the world. Some of their trading is for their own behalf and some is on behalf of their customers.

b) Central Banks
Central banks are very influential in the Forex market. Central Banks act in the Forex market for the purpose to stabilizing or increasing the value of their own country’s currency. They adjust interest rates in their own countries and it has a significant effect on the world Forex market because that either raises or lowers the value of that country’s currency. Central banks can also act for the purpose to realigning exchange rates.

c) Investment managers and hedge funds
In addition to just buying and trading currency on behalf of many smaller traders, investment managers are buying and selling other investments like securities. When a large firm is buying foreign securities or futures, they will need foreign currency to do it. This makes investment firms one of the largest sectors in the Forex market. Hedge funds can trade currencies for speculatively as well.

d) Corporations
When a large company needs to spend money in a country that is not the one they normally operate in, they might have to purchase large amounts of that country’s currency to do the business.

c) Retail traders
This means people like you and me; anyone who wants to trade in the forex market on their own. This makes up a small percentage of the world forex market.

Unlike stocks, futures or options, Forex has no central exchange or clearing house where orders are matched. The Forex market is also not limited to one location, it consists of a vast network of financial institutions, corporations and individuals throughout the world. The Forex market is the largest financial market in the world with an average daily trading volume of more than USD6 trillion. Compare that with the New York Stock Exchange, which only has an average daily trading volume of $55 billion. In fact, if you were to put the world’s equity and futures markets together, their combined trading volume would only equal a QUARTER of the Forex market.
If you’re wondering how trading the Forex market is different than trading stocks, here are a few major benefits:

a) High Liquidity
The forex market has a turnover of over USD6 trillion a day. This results in a highly liquid market whereby there are always buyers and seller in any market condition. The high liquidity and trading volume of forex allow any speculator to open or close a position with ease anytime during trading without trading limit constraint

b) 24-hour market
Forex market operates 24 hours a day, five days a week. Trade whenever you want. You can enter or exit a trade whenever you want from Sunday around 5pm EST to Friday around 4pm EST

c) Costs
There are no clearing fees, exchange fees, government fees and brokerage fees in the forex market. Brokers are compensated for their services based on the bid-ask spread. The retails transaction cost is typically less than 0.1% (10 pip or points) under normal market conditions.

d) Leverage
You can trade on leverage, but this can magnify potential gains and losses.

e) Profit in both Bull and Bear market
Volatility allows traders to profit in any market condition and provides for high probability trading opportunities. It is possible for you to profit no matter which way the market is trending.

f) Ease of access
You can start trading Forex as little as USD100. Straight through order execution allows you to trade at the click of a mouse.

Going “long” is when a trader buys an asset expecting its value to rise. This is also called opening a long position. Going “short” or opening a short position, is when a trader sells an asset, expecting its price to decline so it can be bought back in the future at a lower price.

There are various ways prices can change. Economic and political conditions usually affect the value of an asset, along with interest rates, inflation, and supply and demand.