What is foreign exchange trading?

Foreign exchange trading—also commonly called forex trading or FX—is the global market for exchanging foreign currencies. Forex is the largest market in the world, and the trades that happen in it affect everything from the price of clothing imported from China to the amount you pay for a margarita while vacationing in Mexico.

Do commercial and investment banks trade Forex?

Commercial and investment banks still conduct most of the trading in forex markets on behalf of their clients. But there are also opportunities for professional and individual investors to trade one currency against another. Forex is traded primarily via spot, forwards, and futures markets.

How are forex prices determined?

Instead of trading via a central exchange such as the New York Stock Exchange or London Stock Exchange, forex prices are determined by interbank trading – the buying and selling of currencies between banks constantly, all over the world. The currency market is open 24 hours a day during market hours.

Who regulates forex trading in the UK?

The Financial Conduct Authority (FCA) monitors and regulates forex trades in the United Kingdom. Which Currencies Can I Trade in? Currencies with high liquidity have a ready market and exhibit smooth and predictable price action in response to external events. The U.S. dollar is the most traded currency in the world.