Basically, the term FOREX is a derivative of two words being Foreign Exchange. The FOREX market is where banks, businesses, governments, investors and traders come to exchange and speculate on currencies. The Forex market is also referred to as the ‘FX market’, ‘Currency market’, ‘Foreign exchange currency market’ or ‘Foreign currency market’, and it is the largest and most liquid market in the world with an average daily turnover of $3.98 trillion.
The FX market is open 24 hours a day, 5 days a week with the most important world trading centres being located in London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris, and Sydney.
It should be noted that there is no central marketplace for the Forex market; trading is instead said to be conducted ‘over the counter’; it’s not like stocks, where there is a central marketplace with all orders processed like the New York Stock Exchange – NYSE. Forex is a product quoted by all the major banks, and not all banks will have the exact same price.
Now, the broker platforms take all these feeds from the different banks and the quotes we see from our broker are an approximate average of them. It’s the broker who is effectively transacting the trade and taking the other side of it (Market Makers); they ‘make the market’ for you. When you buy a currency pair…your broker is selling it to you, not ‘another trader’.