What instruments are traded on a foreign exchange market?

Foreign exchange swaps, or FX swaps, are the most traded instrument on the foreign exchange market. Under an FX swap, a trader borrows one currency and loans another currency at an initial date at the same time, and then exchanges the amounts when they are due.

What is a foreign exchange market?

The exchange market is made up of banks, forex dealers, commercial companies, central banks, investment management firms, hedge funds, retail forex dealers, and investors that all trade currency pairs. The foreign exchange market is an over-the-counter (OTC) marketplace that determines the exchange rate for global currencies.

What is foreign exchange trading?

Foreign exchange venues comprise the largest securities market in the world by nominal value, with trillions of dollars changing hands each day. Foreign exchange trading uses currency pairs, priced in terms of one versus the other. Forwards and futures are another way to participate in the forex market.