Foreign Exchange Market Structure

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    The Market

    • The forex market is over-the-counter.Spice shop image by Yanir Taflev from Fotolia.com

      The foreign exchange market is not located in one place. It is an over-the-counter market which means unlike the stock market, there is not a regulated place to trade currencies. The market is a worldwide network of banks, corporations and individuals who use technology to trade through telephones and computers. The market is open 24 hours a day except for weekends and covers three time zones: Asia, Europe and America.

    Quotations

    • Although the market is global, the currency prices are so close that they are almost the same for each currency in all geographic locations. Currencies are quoted in standard named pairs such as EUR/USD (euro against the dollar). The first currency quoted is called the base currency, and the second currency is the called the counter currency. A trader quoting "EUR/USD 1.2950-1.2955," is saying that he bids/buys 1 euro for every 1.2950 dollar he sells, and offers/sells 1 euro for every 1.2955 dollars he buys.

    Size

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