Main Currency Markets

Foreign exchange is traded fundamentally in two distinctive ways. An organized exchange and 'over the counter'. Exchange traded foreign exchange represents a very small portion of the total currency market. The vast majority of foreign exchange deals are traded primarily between banks and other currency market participants 'over the counter'.

Exchange traded currencies

The Chicago Mercantile exchange (CME) in the US, being an “organised” exchange, uses standardized currency contract sizes that represent a specific monetary value and is traded in the International money market (IMM). A central clearing house organizes the matching of transactions between counter-parties. There are certain disadvantages to trading currency futures as outlined in the chapter Advantages of trading FX.

Currency market

Comparably over the counter market is traded around the world by many participants, price quality, reputation and trading conditions determine with whom a participant wishes to trade. This is probably the most competitive market in the world and brokers such as ADVANCED-FOREX must ensure they live up to the highest standards of service and maintain a compliancy with market standards and practices if they want to acquire new customers and retain their existing ones. In 2007 a survey under the auspices of the Bank for International Settlements (BIS), global turnover of reporting dealers was estimated at about USD 3.2 trillion per day, representing a more than 60% increase since 2004.

The largest volume of foreign exchange trading takes place in the United Kingdom, although that nation's currency, the British pound, is less widely traded in the currency market than many others. As shown in the graph below, the United Kingdom accounts for about 34 percent of the global total of foreign exchange trading; the United States ranks a distant second with about 17 percent, Switzerland is third with 6.1 percent, whereas Japan is only fourth with 6 percent.

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