Forex Market
How the Forex Market Works
The forex market isn’t dominated by a single market exchange. It involves a global network of computers and brokers from all over the world. Forex brokers act as market makers as well and they may post bids and ask prices for a currency pair that differs from the most competitive bid in the market.
The forex market is an over-the-counter (OTC) market. Trading happens without a single centralized exchange. Currencies move between those who are trading although brokers provide the means to do so. A substantial amount of interbank forex trading exists and this helps determine swings in exchange rates. Large banks trade currencies to hedge, adjust balance sheets, and trade on behalf of clients.
The forex market is a 24-hour market from Monday morning in Asia to Friday afternoon in New York. It opens from Sunday at 5 p.m. ET until Friday at 5 p.m.
This differs from markets such as equities, bonds, and commodities, all of which generally close in the late afternoon ET. There are exceptions, however. Some emerging market currencies close for a break time during the trading day.
