Understand why Forex is the largest financial market on the planet

Do you know what the largest financial market in the world is? It’s not the New York Stock Exchange, despite its impressive daily volume of US$ 200 billion. The dominant one is the foreign exchange market, or Forex (Foreign Exchange), which moves no less than US$ 6.6 trillion per day. This number is simply colossal.

What makes Forex so gigantic?

The reason? While many people think that currency exchange is just when you exchange money at the airport to travel, the reality is quite different. Most operations in Forex happen for investment and speculation purposes, not out of travel or real trade needs.

Imagine this: traders (currency operators) are constantly buying and selling currencies in hopes of profiting from price fluctuations. This speculative activity is the engine of the market. It’s completely different from exchanging real money for dollars before a trip — such transactions represent only a small slice of the total.

If we consider only the “spot” market (where transactions happen immediately), the volume drops to US$ 2 trillion per day. And if we focus only on the retail trader segment — that is, ordinary people like us — we’re talking about approximately 3% to 5% of the total volume, something between US$ 200 to 300 billion daily.

A market that never rests

Here’s another fascinating detail about Forex: it practically never closes. The market operates 24 hours a day, 5 days a week, remaining open only on weekends.

While you sleep, trading doesn’t stop. It just shifts location. The forex day begins in New Zealand (Auckland/Wellington), then moves to Sydney, then Singapore, Hong Kong, Tokyo, Frankfurt, London, and finally reaches New York, before starting all over again. This nonstop global dynamic makes Forex unique compared to stock or bond markets, which close at the end of each day.

But after all, what is currency exchange?

Let’s go back to basics. Currency exchange is simply swapping one currency for another. If you’ve traveled abroad, you’ve already participated in this. Take Bill as an example: he left Taiwan for the United States. At the airport, Bill found a currency exchange and swapped his local currency (Taiwanese Dollar - TWD) for US Dollars (USD). The exchange rate he found was 0.034, so his 10,000 TWD yielded 3,400 USD.

In this simple moment, Bill sold TWD and bought USD. Done — he participated in the currency market, just like billions of other transactions happen daily in this global, decentralized, and constantly moving market.

The exchange rate changes every second, reflecting the constant supply and demand. That’s why Forex is a lively, dynamic, and always flowing market.