How do you access the Forex market?

Typical retail Forex traders will most likely be accessing the off-exchange foreign currency market (or Forex market) via an FCM (Futures Commissions Merchant) or Forex broker. Trades will not be executed by the typical trader in the actual Interbank market itself.

Additionally, access to the total market will be determined by the chosen Forex broker’s limitations. Typically this includes a specific Forex trading software platform to perform trades through the Forex broker.

FCMs or brokers act as a bridge between individual traders, and their liquidity partner (sometimes larger global banks) that traders would otherwise not have sufficient capital to do business with.

If you are new to the Forex market it would wise to research and understand your broker’s particular business model and method of clearing trades. Consider the following:

1.) The large majority of Forex brokers act as market makers, meaning that by keeping many trades in house they create their own liquidity.

2.) Some retail brokers clear trades directly through to the larger banks that provide their liquidity.

Access to the Forex Market also involves timing. Unlike other financial markets, the Forex market operates 24 hours a day, 5.5 days a week (6:00 PM EST on Sunday until 4:00 PM EST on Friday). Through an electronic network of banks, corporations and individual traders exchange currencies, though as Forex is primarily used as a means for speculative investing, actual physical delivery of currencies is almost never intended. Forex trading begins in the east every day in Sydney, moves to Tokyo, followed by Europe and finally the Americas (in a westward direction relative to the global time rules).