The Forex Market
The foreign exchange market dwarfs the combined operations of the New York, London, and Tokyo futures and stock exchanges. According to its size and scope it is many times larger than all other markets. Stats shows that spot transactions and forward outright Forex trading take place in the inter-bank market. 51% of the market is in spot transactions, followed by 32% in currency swap transactions. Forward outright transactions represent another 5% of this daily turnover, with options on ‘interbank’ transactions making up another 8%. Therefore the inter-bank market accounts for 96% of the global foreign exchange market, with the remaining 4% being divided among all the global futures exchanges.
For traders, Forex trading provides an alternative to stock market trading. While there are thousands of stocks to choose from, there are only a few major currencies to trade (the US Dollar, Japanese Yen, British Pound, Swiss Franc, and the Euro are the most popular). Currency trading also provides a lot more leverage than stock trading, and the minimum investment to get started is a lot lower. Add to that the ability to choose flexible trading hours and you have the reason why so many stock traders have flocked to day trade currencies.