Risk Disclaimer : Forex & CFDs are complex products, not suitable for everyone, and come with the high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Foreign exchange (Forex or simply FX) is all about speculating and trading in the world’s many currencies. Today, individual investors are increasingly staking claim to this multi-trillion-dollar market that was once reserved for large financial institutions.
The currency market, especially from the retail segment, has absolutely exploded. According to the Bank for International Settlements, which collects data from 54 central banks, the global FX market trades over four trillion dollars a day.
Investors trade currencies over the counter on the spot, using futures traded on an exchange, or by using exchange-traded funds. Most trading, however, is done over-the-counter (OTC), meaning without an exchange. This is also referred to as the OTC market.
You can trade Forex over-the-counter, as a future on a futures exchange, or to some degree, as an ETF.
The over-the-counter market, which currently occupies over 90% of the total volume, is driven by money center banks, multinational financial institutions, and retail providers. They all combine to create the market. Now, for the retail user, there is an opportunity to trade on all three.
The reason the OTC market is so popular is that it represents the purest version of trading currencies.
