The foreign exchange market (forex, FX, or currency market) is a global decentralized market for the trading of currencies. In terms of volume of trading, it is by far the largest market in the world.
Is it important to realize that, unlike stock exchange, there is no central marketplace for currency trading; money is traded through a network of international dealers and intermediaries. The main participants in this market are the larger international banks, but also commercial companies, investment management firms, hedge funds and retail forex brokers and investors.
The FX market is open 24 hours a day, 5 days a week with the exception of weekends. The major financial centers are in London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.
Market Maker vs ECN
Unlike people may think, there are many differences among brokers in the market. Basically they are divided in two big categories: the MM ( Market Maker ) and the ECN ( Electronic Communication Network ) ones.
Market Maker brokers have the feature, as the name says, to “Artificially Create The Market”. They put themselves as counterpart of client’s trade. The order is managed through a Dealing Desk, which can be automated or supervised by physical people. The market prices are reproduced similarly of the real ones for their clients.
ECN brokers have a total different way to operate. Thanks to their state-of-the-art technology, clients can join the benefits of the interbank market, without any conflict of interests. In this case, there is no Dealing Desk in the operation, so the broker cannot trade against the client. Its function is simply to give access to it.