The currency market, or more specifically the foreign exchange market, derives its name from the generic term foreign exchange market. The foreign exchange market is a network of decentralized global trading partners, including banks, public and private institutions, retailers, speculators and central banks involved in buying and selling.
Forex is a spot market, which means it trades at current market prices, which is determined by supply and demand within the market. This is different from the currency futures traded on the US Commodity Exchange, which trades at contract prices for future delivery. In the spot market, you trade cash at the current market price.
Foreign exchange is the largest and fastest growing financial market in the world. According to a 2007 survey by the Central Bank in three years, the foreign exchange market handled nearly $3.2 trillion in transactions per trading day. From the appearance, the average daily trading volume of the foreign exchange market is almost 20 times that of the trading market. New York Stock Exchange.
Travelers, multinational corporations and governments have promoted demand for foreign exchange. Visitors from the United States need euros to enjoy European holidays; companies like Microsoft convert overseas profits into dollars. The government holds the reserve currency and manipulates the money supply when implementing monetary policy. The foreign exchange market was created to facilitate the sale of currency to customers who intend to deliver the currency; however, the vast majority of transactions were done by profit-seekers.
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