Market Structure

Most FX dealers specialize in one or a small grou pof closely related currencies. In face, there is not just one FX market but groups of more or less interrelated currency pairs. Some of the main traffic routes are

• US dollar/D-mark/Swiss franc
• US dollar/Japanese yen
• Sterling/US dollar
• Member currencies of the European Exchange Rate Mechanism
• The Scandinavian currencies
• The Middle Eastern currencies

Liquidity in the major currencies is good but the more "exotic" currencies can be thinly traded and treacherous for the inexperienced trader.

What is Foreign Currency Deal?

A foreign exchange - or FX - transaction involves the  purchase of one currency against the sale of another currency for settlement or delivery on a specified date. The rate of exchange is the price per unit of one of the currencies expressed in units of the other currency.

Definition of Foreign Exchange(FX)

A Market where participants are able to purcahse,sell,exchange on currencies. FX markets are made up of banks,commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors. The forex market is considered to be the largest financial market in the world.