Forex market size, volume, and liquidity

Forex market size 

The forex market size makes it the most important market in the world. Its size is a multiple of the stock market and bonds market. The daily trading volume, size, and depth of the fx market make it a perfect interbank market for all. This is the most liquid market, and for this very reason, traders find it easy to buy and sell any currency pair instantly.

Forex market size

The average turnover of the forex market is 6 trillion dollars per day. So forex daily turnover or volume is huge if you compare it with stock market volume. This makes this foreign exchange market the biggest market in the world. If you think about the London stock exchange (LSE), Tokyo stock exchange (TSE), or new york stock exchange (NYSE), then you will find that all of them have a physical location. But in the forex market, you can’t find any central body. All the trading activities happen through the “interbank” system.

As this is a huge market so swingers, scalpers, day traders, and position traders all can make a living from this market. Traders all over the world can trade from anywhere in the world as long as they have an internet connection. The amazing fact is that the fx market is spread all over the world, even without having any central body.

OTC market

Forex transactions are carried out in the OTC market. In the forex market, there is no centralized place where transactions happen.OTC market or over-the-counter market is a broadcast market. In this OTC market, traders trade currencies, stocks, commodities, and some other instruments. This transaction happens directly between two parties even without having any central exchange house. Here all the trading is conducted electronically.  

Traders determine who they want to trade. This determination depends on the attractiveness of prices. The forex otc market is the most popular financial market in the world. a large number of individual organizations trade actively in this otc market.

The foreign exchange market has some crucial characteristics. Like low regulations, high leverage, high liquidity is found in this market.

What is the most traded major currency or big boss in the forex market?

If you are a forex trader, then you must have to pay close attention to U.S. dollars. Remember, the U.S. dollar is king here. And the U.S. Dollar makes up the majority of forex transactions in the fx market.85% of all transactions are made through the u.s dollar. so you can undoubtedly name it as “king” in the fx market

Now you may raise questions about why everyone values the U.S. dollar? Of course, there are many significant reasons behind this reason, but I am stating only a few.

1/This is the reserve currency of the world, and most of the central banks like the Bank of England own it.

2/IMF or international monetary fund announces that 63% of the world official foreign exchange rate is reserved by U.S. dollar

3/US economy is the largest economy. It has the most liquid financial market in the world.

4/look at their political system. If you compare it with any other country, you will find that this country owns the world’s most stable political system.

5/for many cross-border transactions, the US dollar is the sole medium. If Japan wants to buy oil from Qatar, it can be purchased only with us dollars as oil is priced in us dollars. So if Japan doesn’t have any dollars, it has to sell its Japanese yen first and buy us dollars.

What are the other most heavily traded currencies except the US dollar?


2/Japanese yen

3/british pound

4/Australian dollar 

5/new Zealand dollar

6/swiss frank

7/canadian dollar

8/chinese Yuan

Forex trading volume and liquidity

forex market size

As we already know that forex market size is huge so this market is open twenty-four hours a day, five days a you ever think about why you can enter and exit your trades with ease and instantly? The reason is simple. High liquidity makes it possible to trade here such speedily. In any market, you have to wait for a buyer to enter, but you won’t have to wait for the buyer to execute your trades in the forex market.

This is why traders from other markets are attracted to the fx market. There are mainly three trading sessions.

  • Asian session
  • European session
  • And US session

Liquidity in the foreign exchange market is very important. Because liquidity in the forex market differs from one trading session to another trading session. Most traded currency pairs in this market are EUR/USD(here USD is counter currency) and USD/JPY(here USD is base currency). Annually, almost 42% of all forex trades are covered by these two major dollars alone make up 85% of total fx volume, the first position as most traded currency. Euro covers 45%, and the Japanese yen covers 25% of the total trading volume and gains second and third positions.

What is speculation in the forex market?

Speculation in the forex market is buying and selling foreign currency, taking a high risk to gain huge profit in an uncertain condition. Typically any speculator buys any particular currency when its value gets weak and holds that currency for a short period. When the value of that currency gets appreciated, then speculators sell that currency.

The speculation has both a stabilizing and destabilizing impact on the market. Suppose that when speculators sell any currency when it is weak and wish it will be weaker, buy any strong currency hoping it will be stronger, which destabilizes the market. But if the speculators buy the currency when the price is low and sell the currency when the price is high, it has a stabilizing impact on the forex market.

When any investor or any trader is more focused and concerned about gaining profit overlooking the high risk, it is called speculations. Such investors wish to make huge profits based on market value changes for any investment and have no idea about long-term investing. Here in the fx market; most of the currency trading is based on speculation.

the fun fact is that 90% of total trading volume in the fx market is brought about by speculators. Commercial and financial transactions make the rest 10%

What is fundamental & technical analysis and  how can you take advantage of the fx market?

Supply and demand are very important in the forex market. If you want to be a successful forex trader or market participant, you need to focus on this core fundamental analysis. Interest rates, economic growth, employment, inflation, deflation, geopolitical risk have a major impact on the supply and demand of any currency market. For understanding fundamental analysis, you need to understand the basics of supply and demand rules. If you can analyze these keynote factors which make the major move in the currency market, then there is a huge chance that you will be able to make money from this market.

Although you can find all these events and fundamental news on your chart, which we call technical analysis, for that very reason, you need to know how to read charts professionally. Price charts can tell every story of the fundamental news and supply, demand theory. That’s why most forex institutional investors and speculators solely depend on technical analysis and charts when making trading decisions. They enter and exit from any trading position by analyzing the chart.

But it is recommended that you master both fundamental analysis and technical analysis if you want to rule the market and make a profit constantly. 

Who are the big boys or the biggest fx players?

There are mainly two types of investors in the fx market.  1/governments, hedge funds, large banks like Deutsche Bank, and different portfolio managers are the biggies in this arena. We call them institutional traders.

Surprisingly 90% of total foreign exchange trading is done by these institutional traders. Many times you have heard that big money or smart money moves the market price. But perhaps you didn’t understand what big money or smart money is. When these institutional traders enter the market to make a turmoil in the market, we call it smart money flow. As a retail trader, you have to be very clear about these terms. Remember, if big money can move the market, and if you know nothing about big money or who creates major trends in the market, you won’t be able to make money in this very liquid high-volume market.

2/Individual traders and some other professional traders who don’t run big institutions like Goldman Sachs are in the second group caps 10& of the forex market. Retail traders try to speculate the market. Retail traders hold the position for a short time and want huge gain taking a high risk. Next time you find any false break of a support or resistance level in the chart, then you will understand why big institutions play a major role in price turmoil.

Which countries most trade forex 

According to the Bank of International Settlements data, the top three countries have the largest volume traded in the forex market. These countries are United Kingdom(43.1%), United States(16.5%), Singapore(7.6%), Hong Kong (7.6%), Japan(4.5%), Switzerland (3.3%), France(2%), China(1.6%), Germany(1.5%), Australia(1.4%).

forex market size
Forex market size

If you ever wonder why the trading session is different from one another, then your answer lies here. As these three countries trade most in the foreign exchange reserves market, volume is low in the Asian session and high in London and the US. One important thing that is noticeable is that sometimes the volume gets very high in the fx market. Why does this happen? Because when two high-volume sessions overlap each other, markets get crazy, and trading volume increases. Basically, this occurs when London and New York sessions trade at the same time. A large portion of the day’s volume is traded then.


The forex market is the largest and most liquid market where the US dollar makes up the majority of forex transactions. If you compare daily forex volume with the stock market and bond market daily volume, they look tiny in the forex market size. So if you wish to make a living in this market, you need to possess the proper knowledge of fundamental analysis, technical analysis, and money management.

Professional trader’s opinion about forex market size & volume

” Volume in forex is the amount of currency bought and sold within a certain time period “

Rebecca Cattlin

” Forex market’s liquidity makes it easy for traders to sell and buy currencies without delay”

Warren Venketas

” The Forex market is the largest and most liquid asset market on earth “

Tim Fries

” The UK is by far the largest fx trading center, contributing to 43.1% of the world’s foreign exchange turnover “

Justin Grossbard


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