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.