Foreign exchange market

foreign exchangeForexcurrency exchangecurrency marketcurrency tradingforeign exchange tradingcurrency marketsFXcurrenciesForex market
The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies.wikipedia
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Currency

currenciesforeign currencycoinage
The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies.
These various currencies are recognized as stores of value and are traded between nations in foreign exchange markets, which determine the relative values of the different currencies.

Exchange rate

exchange ratesreal exchange rateforeign exchange rate
This market determines foreign exchange rates for every currency.
Exchange rates are determined in the foreign exchange market, which is open to a wide range of different types of buyers and sellers, and where currency trading is continuous: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday.

Euro

EUReuros
For example, it permits a business in the United States to import goods from European Union member states, especially Eurozone members, and pay Euros, even though its income is in United States dollars.
The euro, which is divided into 100 cents, is the second-largest and second-most traded currency in the foreign exchange market after the United States dollar.

Interbank foreign exchange market

interbank marketinter-bank marketinterbank
Most foreign exchange dealers are banks, so this behind-the-scenes market is sometimes called the "interbank market" (although a few insurance companies and other kinds of financial firms are involved). At the top is the interbank foreign exchange market, which is made up of the largest commercial banks and securities dealers.
The interbank market is the top-level foreign exchange market where banks exchange different currencies.

United States dollar

US$$USD
For example, it permits a business in the United States to import goods from European Union member states, especially Eurozone members, and pay Euros, even though its income is in United States dollars.
The U.S. dollar as a currency is often referred to as the greenback by foreign exchange traders and the financial press in other countries, such as Australia, New Zealand, South Africa, and India.

Floating exchange rate

floatfloatedfloating
Countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed per the Bretton Woods system.
A floating exchange rate (also called a fluctuating or flexible exchange rate) is a type of exchange rate regime in which a currency's value is allowed to fluctuate in response to foreign exchange market events.

Currency intervention

currency manipulationintervention in the foreign exchange marketintervene in the foreign exchange market
Policymakers may intervene in foreign exchange markets in order to advance a variety of economic objectives: controlling inflation, maintaining competitiveness, or maintaining financial stability.

Central bank

central bankscentral bankingcentral banking system
These interventions can also influence the foreign exchange market and thus the exchange rate.

Exchange rate regime

exchange-rate regimeexchange rate policyexchange rate
Countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed per the Bretton Woods system.
An exchange rate regime is the way a monetary authority of a country or currency union manages the currency in relation to other currencies and the foreign exchange market.

Pound sterling

£GBPpounds
At the end of 1913, nearly half of the world's foreign exchange was conducted using the pound sterling.
Sterling is the fourth most-traded currency in the foreign exchange market, after the United States dollar, the euro, and the Japanese yen.

Financial centre

financial centerfinancial centresfinancial
Financial centers around the world function as anchors of trading between a wide range of multiple types of buyers and sellers around the clock, with the exception of weekends.
London is the largest centre for derivatives markets, foreign exchange markets, money markets, issuance of international debt securities, international insurance, trading in gold, silver and base metals through the London bullion market and London Metal Exchange, and international bank lending.

The Bank of Tokyo

Bank of TokyoBank of Tokyo.The Bank of Tokyo, Ltd.
As a result, the Bank of Tokyo became the center of foreign exchange by September 1954.
The Bank of Tokyo, Ltd. was a Japanese foreign exchange bank that operated from 1946 to 1996.

Leverage (finance)

leverageleveragedfinancial leverage
On the other hand, the high level of leverage afforded to borrowers involved in forex trading presents relatively low risk per unit due to the relative stability of that market.

Bank for International Settlements

BISBank of International SettlementsBank for International Settlements (BIS)
According to the Bank for International Settlements, the preliminary global results from the 2019 Triennial Central Bank Survey of Foreign Exchange and OTC Derivatives Markets Activity show that trading in foreign exchange markets averaged $6.6 trillion per day in April 2019.
While monetary policy is determined by most sovereign nations, it is subject to central and private banking scrutiny and potentially to speculation that affects foreign exchange rates and especially the fate of export economies.

Hong Kong

Hong Kong Special Administrative RegionHong Kong, ChinaHongkong
Trading in the United States accounted for 16.5%, Singapore and Hong Kong account for 7.6% and Japan accounted for 4.5%.
It is the world's tenth-largest exporter and ninth-largest importer, and its legal tender (the Hong Kong dollar) is the world's 9th-most traded currency (as of 2019).

Investment banking

investment bankinvestment bankerinvestment banks
At the top is the interbank foreign exchange market, which is made up of the largest commercial banks and securities dealers.
An investment bank may also assist companies involved in mergers and acquisitions (M&A) and provide ancillary services such as market making, trading of derivatives and equity securities, and FICC services (fixed income instruments, currencies, and commodities).

Electronic trading platform

electronic tradingtrading platformonline trading
The growth of electronic execution and the diverse selection of execution venues has lowered transaction costs, increased market liquidity, and attracted greater participation from many customer types.
This includes products such as stocks, bonds, currencies, commodities, derivatives and others, with a financial intermediary, such as brokers, market makers, Investment banks or stock exchanges.

Percentage in point

pippips
The difference between the bid and ask prices widens (for example from 0 to 1 pip to 1–2 pips for currencies such as the EUR) as you go down the levels of access.
In finance, specifically in foreign exchange markets, a percentage in point or price interest point (pip) is a unit of change in an exchange rate of a currency pair.

Alex. Brown & Sons

BT Alex. BrownDeutsche Bank Alex. BrownAlex Brown
Alex. Brown & Sons traded foreign currencies around 1850 and was a leading currency trader in the USA.
Brown and Sons, Inc. By the 1820s, Alexander Brown had expanded his business interests into sterling exchange and international trade, including tobacco and cotton.

XTX Markets

XTX Markets is a currency trading and market maker company.

Futures contract

futuresfutures contractsfutures trading
Foreign exchange futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are traded more than to most other futures contracts.

Carry (investment)

carry tradecarrycarry trades
It also supports direct speculation and evaluation relative to the value of currencies and the carry trade speculation, based on the differential interest rate between two currencies.
There is some substantial mathematical evidence in macroeconomics that larger economies have more immunity to the disruptive aspects of the carry trade mainly due to the sheer quantity of their existing currency compared to the limited amount used for FOREX carry trades, but the collapse of the carry trade in 2008 is often blamed within Japan for a rapid appreciation of the yen.

Foreign exchange fraud

Forex scamillegal currency exchange
Retail brokers, while largely controlled and regulated in the US by the Commodity Futures Trading Commission and National Futures Association, have previously been subjected to periodic foreign exchange fraud.
Foreign exchange fraud is any trading scheme used to defraud traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market.

High-frequency trading

high frequency tradinghigh-frequency tradershigh-frequency trader
The increase in turnover is due to a number of factors: the growing importance of foreign exchange as an asset class, the increased trading activity of high-frequency traders, and the emergence of retail investors as an important market segment.
Statistical arbitrage at high frequencies is actively used in all liquid securities, including equities, bonds, futures, foreign exchange, etc. Such strategies may also involve classical arbitrage strategies, such as covered interest rate parity in the foreign exchange market, which gives a relationship between the prices of a domestic bond, a bond denominated in a foreign currency, the spot price of the currency, and the price of a forward contract on the currency.