What is foreign exchange?
The foreign exchange market is vast. Every day $ 1,600 billion is traded through thousands of dealing rooms in dozens of countries throughout the world. Amazingly, this figure is greater than the global equity markets (shares) trade in an entire year. 95% of this amount is traded for speculative gain and is largely accounted for by banks trading with each other, known as 'inter-bank' trading. However, this still means that £ 80 billion is traded daily for commercial reasons for both businesses and private investors alike.
The UK is by far the world's largest financial market. In fact the UK trades a greater volume than the financial markets of New York and Hong Kong put together. This is partly due to the historical significance of London as a world-trading centre and partly because of the time zone advantage the UK has over other countries, which enables it to cover both European and US hours of trade.
The market opens in the Far East on Sunday evening (UK time) and trades continuously through the Middle East, Europe, London and the US. The only break in operations comes between Friday night close in the US and Sunday night opening in New Zealand.