Foreign exchange is the largest financial market in the world, and the most misunderstood. There is no building, no opening bell, no central exchange. FX is an over-the-counter network: banks, dealers and liquidity providers quoting prices to each other around the clock, five days a week. When you trade through a broker, you are plugging into an aggregated feed of those quotes.
A market of pairs
A currency has no absolute price — it is only ever worth something in terms of another currency. That is why everything is quoted in pairs. EURUSD at 1.0900 means one euro buys 1.09 US dollars. The first currency is the base, the second is the quote, and every trade is two trades at once: buying EURUSD means buying euros and selling dollars in the same breath. If the euro strengthens or the dollar weakens, the pair rises; you profit if you bought and lose if you sold.
Who is on the other side
The daily flow is dominated by bank dealing desks, funds and corporates hedging real-world cashflows — an exporter selling dollar revenue, an airline fixing fuel costs. Central banks appear rarely but decisively. Retail traders access this wholesale market through brokers who aggregate liquidity from tier-1 providers, which is why a good broker is measured by the depth and stability of its feed, not by promises.
A day in the market
- Asia-Pacific opens the week: Sydney and Tokyo set the early tone, usually the quietest stretch.
- London is the heavyweight session — the deepest liquidity and the tightest spreads of the day.
- New York overlaps London for four hours: the busiest, most traded window in FX.
The practical consequence: the same pair behaves differently at different hours. Spreads breathe with liquidity, and a strategy tested at the London open may not survive the Asian lull. From here, the next lesson puts numbers on all of it — pips, lots and what a trade actually costs.