How Does the Forex Market Work?
The foreign exchange market, most commonly known as the Forex market, is home to the global decentralized trading of international currencies–specifically where trillions of U.S. dollars are traded each day. If you need Japanese yen, you buy it through the Forex market. Participants trade not in one huge platform but rather through electronic communication networks (ECNs) or phone networks in different markets across the globe. Dubbed by investopedia.com as the largest financial market in the world, the forex market works round the clock five days a week: from Sunday (5 p.m. EST) to Friday (4 p.m. EST). It is also the most fluid and most accessible market because of its scope and size. But how does this huge market really work? And why is there a need to trade currencies?