Glossary Term

Foreign Exchange Market (FX)

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Foreign exchange is a global currency market where all the world’s national currencies can be exchanged, facilitating global trade and the movement of resources to where they are most needed. It is not like a stock market, where transactions take place on a centralized exchange. It is an over-the-counter market that is decentralized and takes place wherever two parties agree on an exchange rate for two currencies and make a trade. Due to this decentralization, there is no one canonical price for any currency pair. Instead, what you have are tiers of liquidity that are available at different rates depending on the size of the trade you are able to cover. The FX market is currently the largest market in the world. The last survey of its flows was conducted in 2016 and revealed that in excess of $5 trillion dollars are traded every single day.

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What is Foreign Exchange Market (FX)? A Traders Expert explanation.

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