What ls the Forex Market

I like to think of it as the Big Kahuna of financial markets. The foreign exchange market, most often called the forex market, or simply the FX market is the largest and most liquid of all international financial markets.

The forex market is the crossroads for international capital, the intersection through which global commercial and investment flows have to move. International trade flows, such as when a Swiss electronics company purchases Japanese made components, were the original basis for the development of the forex markets.

Today, however, global financial and investment flows dominate trade as the primary nonspeculative source of forex market volume. Whether it's an Australian pension fund investing in U.S. Treasury bonds, or a British insurer allocating assets to the Japanese equity market, or a German conglomerate purchasing a Canadian manufacturing facility, each cross-border transaction passes through the forex market at some stage.

More than anything else, the forex market is a trader’s market without equal. It’s a market that’s open around the clock six days a week, enabling traders to act on news and events as they happen. lt’s a market where half-billion-dollar trades can be executed in a matter of seconds and may not even move prices noticeably. Try buying or selling a half-billion of anything in another market and see how prices react.

Firms such as FOREX.com, Saxo Bank, and MAN Financial have made the forex market accessible to individual traders and investors. You can now trade the same forex market as the big banks and hedge funds.