The FX market is the place where currencies are traded. It is the only genuinely perpetual and uninterrupted trading market in the universe. In the past, institutional companies and significant banks dominated the forex market, representing clients. However, it has become more retail-oriented in recent years, and traders and investors of various holding sizes have started participating.
An interesting aspect of global forex markets is that no physical structures function as trading venues for the markets. Instead, it is a sequence of connections made via trading terminals and computer networks. Participants in this market include institutions, investment banks, commercial banks, and retail investors.
The foreign exchange market is believed to be more opaque than other financial markets. Currencies are exchanged in OTC markets, where disclosures are not mandatory. Large liquidity pools from institutional firms are a prevalent feature of the market. A country’s economic parameters might be the primary criterion for determining its price. However, that is not the case. A 2019 survey revealed that the motivations of large financial institutions played the most crucial role in deciding currency prices. Forex is mainly traded through spot markets, forward markets, and futures markets.