Forex Market Size5 min readReading Time: 2 minutes
Forex or FX, the abbreviation for Foreign Exchange; literally means currency exchange. You can use the definition of Forex to refer to all international markets where one currency is valued against another currency and where the currency is traded.
The daily trading volume of the Forex market, which is the largest market in the world, is approximately $5.3 trillion per day, according to the BIS (Bank for International Settlement) report published every three years. 1.5 trillion dollars of these transactions are carried out by individual investors.
While making these transactions, investors evaluate the performance of the countries they trade in relative to each other. If you consider that the daily trading volume of NYMEX, the largest stock exchange in the world, is approximately 22.5 billion dollars, you can have an idea about the size of the Forex market.
The forex market is not just currency trading. In this market, besides commodities such as gold, silver, and oil, you can also trade futures contracts defined as CFDs.
What is Forex?
The Forex market is an over-the-counter market (OTC) with this feature, open 24 hours a day, 5 days a week, and there is no single transaction hub. Financial hubs like London, New York, and Tokyo are where transactions from all over the world are made.
The Forex market is the most liquid market in the world thanks to transactions by central banks, commercial banks, institutional investors, hedge funds, insurance companies, international institutions, and individual investors.
The Forex market offers minimal costs and commission-free trading due to its huge trading volume and liquidity characteristic. Given electronic communication networks and sophisticated technological infrastructure, all investors have had access to their accounts online and may manage their portfolios any way they see fit since the early 1990s.
Due to the high level of currency volatility, investors can now benefit from the foreign exchange markets. The Forex market provides both individual and institutional investors several benefits thanks to its leverage factor and bidirectional trading feature.
Forex Market Size and Liquidity
The FX market is the best trading market due to its size and depth. Because of its liquidity, trading currency is quick and simple for traders. This results in narrow spreads for advantageous quotations.
It is the most actively traded market in the world due to its low costs, broad access to many marketplaces, and flexible trading hours.
The size of the forex market will be made clear in this essay, enabling a better grasp of its macroeconomic mechanisms. offering a strong basis for forex trading in the end for all traders, from novices to experts.
The Forex market size averaged $5.1 trillion per day in 2016, according to the Bank for International Settlements triennial report.
This amount is less than the $5.4 trillion reported in the prior report from 2013. The majority of forex trading turnover is accounted for by a small number of nations.
The largest international trading desks as a share of the overall average turnover are shown in the graph below.