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The currency markets · lesson 1 of 20

What the foreign exchange market is

The foreign exchange market, also called forex, is where currencies are traded. It serves importers and exporters, those who invest abroad, banks and governments, because almost every international transaction requires converting money.

It has no central exchange. It is an over the counter market: trades take place directly between banks, intermediaries and clients, connected by electronic networks.

It is the largest financial market in the world. According to the triennial survey of the Bank for International Settlements, in April 2022 average daily trading was about 7.5 trillion dollars.

Questions

1. What is traded in the foreign exchange market?

Currencies

Forex is the market where one currency is exchanged for another.

2. What does it mean that forex is over the counter?

That trades take place directly between participants, with no central exchange

There is no single venue: the market is a network of participants.

3. According to the Bank for International Settlements, how much was average daily trading in April 2022?

About 7.5 trillion dollars

This is the figure from the triennial survey of April 2022.

Next lesson: Currency pairs

Continue from lesson 4

The currency markets: an online course in 20 short lessons with quizzes and a final certificate, on Unicorn Academy.

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