The forex market allows participants, such as banks and individuals, to buy, sell or exchange currencies for both hedging and speculative purposes. The foreign exchange (forex) market is the largest financial market in the world and is made up of banks, commercial companies, central banks, investment management firms, hedge funds, retail forex brokers, and investors.

KEY TAKEAWAYS

The forex market allows participants, including banks, funds, and individuals to buy, sell or exchange currencies for both hedging and speculative purposes.
The forex market operates 24 hours, 5.5 days a week, and is responsible for trillions of dollars in daily trading activity.
Forex trading can provide high returns but also brings high risk.
The forex market is made up of two levels: the interbank market and the over-the-counter (OTC) market.
Many forex accounts can be opened with as little as $100.

// Understanding the Forex Market

The forex market is not dominated by a single market exchange, but a global network of computers and brokers from around the world. Forex brokers act as market makers as well and may post bid and ask prices for a currency pair that differs from the most competitive bid in the market.

The forex market is made up of two levels—the interbank market and the over-the-counter (OTC) market. The interbank market is where large banks trade currencies for purposes such as hedging, balance sheet adjustments, and on behalf of clients. The OTC market, on the other hand, is where individuals trade through online platforms and brokers.

From Monday morning in Asia to Friday afternoon in New York, the forex market is a 24-hour market, meaning it does not close overnight. The forex market opens from Sunday at 5 p.m. EST to Friday at 4 p.m. EST.

This differs from markets such as equities, bonds, and commodities, which all close for a period of time, generally in the late afternoon EST. However, as with most things, there are exceptions. Some emerging market currencies close for a period of time during the trading day.

// Stock CFD trading

With Investous you can trade Contracts for Difference (CFDs) that use forex as an underlying asset, allowing you to go long or short a company’s shares without actually owning them. This enables you to speculate on the moving prices of shares, even if you don’t have access to an exchange like the New York Stock Exchange or London Stock Exchange. For instance, you’d buy contracts for IBM shares if you believe shares of the company will increase in price or sell them short if you think price will decrease. The beauty of trading CFDs is the ability to speculate on prices rises or falling while also being entitled to the dividends if the company announces payouts to shareholders. With a long list of major global company shares available, get in on the action today by joining Investous.