An Overview of the Global Forex Market

There are several ways to make money in the global forex market. There are two major types of participants: retail traders and speculators. Both groups pay large spreads, and their primary purpose is to make money by trading currency prices. However, with the development of technology, smaller traders are able to enter the market and participate in it. This article will provide an overview of the forex market and its different components. After reading this article, you should be better prepared to trade in the global forex market.

Foreign exchange rates fluctuate because of an imbalance in the supply and demand. Because of this, people saw potential in the fluctuations in the forex market and began participating in it with the intention of profiting from them. Initially, only large investment funds and speculators performed forex trades. But, with the development of technology, banks created forex trading platforms and encouraged their clients to execute trades. Eventually, more traders entered the market.

In 2019, there were 7 major currency pairs, accounting for nearly 70% of daily turnover. Of those, USD/EUR is the most traded pair, with a volume of more than $24 trillion every day. The USD/AUD pair, which is commonly known as the Aussie, accounted for 5.4% of daily turnover in 2019. The USD/CAD pair, which is known as the Loonie, represented 4.4% of trade volume in 2019.

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