About Forex

If everyone in the world used the same currency, there would be no need for a foreign currency exchange market or foreign exchange rates. However, our world consists of several national currencies and as individuals or companies from one country trade across borders, the need for foreign currency arises. For example, when a U.S. importer buys French wine, either the importer needs Euros to pay the French merchant or the French merchant must accept US Dollars and then convert them to Euros.

The Foreign Exchange is not traded on a physical exchange like the stock market. It is traded via the telephone or through the Internet. This electronic structure has contributed to making the FOREX the largest marketplace in the world. With over $1.5 trillion dollars traded per day versus $25 billion per day traded on the New York Stock Exchange (NYSE), the Foreign Exchange market offers many trading opportunities due to the low cost of executing the transactions and the speed at which the execution occurs. The (spot) FOREX market is open 24 hours a day, six days a week, Sunday evening through Friday afternoon.

Market Hours

The spot FX market is unique to any other market in the world, as trading is available 24-hours a day. Somewhere around the world, a financial center is open for business, and banks and other institutions exchange currencies, every hour of the day and night with generally only minor gaps on the weekend. Essentially foreign exchange markets follow the sun around the world, giving traders the flexibility of determining their trading day.

How market hours work:
Time Zone New York GMT
Tokyo Open 7:00 PM 0:00
Tokyo Close 4:00 AM 9:00
London Open 3:00 AM 8:00
London Close 12:00 PM 17:00
NY Open 8:00 AM 13:00
NY Close 5:00 PM 22:00

Market Participants

Until recently, the Forex market wasn't accessible to the retail trader or individual speculator. With the large minimum transaction sizes and often-stringent financial requirements, banks, hedge funds, major currency dealers and the occasional high net-worth individual speculator were the principal participants. These large traders were able to take advantage of the many benefits offered by the Forex market versus other markets - including vast liquidity, 24-hour market access, and the strong trending nature of the world's primary currency exchange rates.