“Foreign exchange market”

definition

The foreign exchange market (also known as the FX market or Forex market) is the largest market in the world, with an estimated $5.3 trillion exchanged every day. It is a global, decentralised exchange where the world’s currencies change hands. The market is in constant flux, with exchange rates changing by the second.

The vast majority of the currencies exchanged on the global FX market are bought (and sold) because investors speculate that their price will go up (or down).

Only a small percentage of total forex trade is traceable to real economy transactions (the international trade of goods and services).

The foreign exchange market is essential to the functioning of international trade. It is what allows a company in the United States to purchase a product from a European supplier.