Overview

The foreign exchange market — most often called the forex

market, or simply the FX market — is the most traded finan-

cial market in the world. We like to think of the forex market as

the “Big Kahuna” of 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 non-speculative 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 transac-

tion passes through the forex market at some stage.

More than anything else, the forex market is a trader’s market.

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.

It’s a market where half-billion-dollar trades can be executed

in a matter of seconds and may not even move prices notice-

ably. Try buying or selling a half billion of anything in another

market and see how prices react.