The forex trading markets represent the largest and most liquid financial market in the world, where trillions of dollars are exchanged daily. These decentralised markets operate 24 hours a day, five days a week, enabling traders across the globe to buy and sell currencies in real-time. This article explores how the forex markets work, who participates in them, and what traders need to understand to navigate them effectively.

Key Takeaways

• Forex trading markets are global, decentralised, and operate continuously from Monday to Friday.
• The market is divided into major, minor, and exotic currency pairs.
• Key trading sessions include London, New York, Sydney, and Tokyo.
• Economic data, geopolitical events, and central bank policy drive price movements.
• Traders require platforms, brokers, and education to participate confidently and profitably.

Understanding the Structure of Forex Markets

Unlike traditional stock markets that are centralised, forex markets operate over-the-counter (OTC), meaning transactions occur directly between parties, usually through broker networks or electronic trading platforms.

Major Currency Pairs

These are the most traded and include:

• EUR/USD
• GBP/USD
• USD/JPY
• USD/CHF
• AUD/USD
• USD/CAD
• NZD/USD

Minor and Exotic Pairs

• Minors exclude the USD but include combinations like EUR/GBP or GBP/JPY.
• Exotics include emerging market currencies, e.g., USD/TRY or EUR/ZAR, with higher volatility and wider spreads.

Main Forex Trading Sessions

Session	Key City	GMT Time	Liquidity Characteristics
Sydney	Australia	10 PM – 7 AM	Slower pace, starts the trading day
Tokyo	Japan	12 AM – 9 AM	Active JPY pairs, overlaps with Sydney
London	UK	8 AM – 5 PM	Most liquid, major news releases, GBP & EUR
New York	USA	1 PM – 10 PM	High volatility, overlaps with London session

The London-New York overlap (1 PM – 5 PM GMT) is typically the most volatile and liquid period in the forex market.

Factors That Influence Forex Markets

Forex prices fluctuate based on several macroeconomic and geopolitical variables:

1. Central Bank Policy

Interest rate changes, QE tapering, or hawkish/dovish commentary can dramatically shift currency values.

2. Inflation and GDP Data

Markets react to CPI, GDP growth, and employment statistics, which indicate economic health.

3. Political Stability and Elections

Uncertainty weakens currencies; stable regimes often attract foreign capital.

4. Risk Sentiment

In times of global risk aversion, traders move capital to safe-haven currencies like USD, JPY, or CHF.

Case Study: Mastering Global Markets Through Education

Lina, a finance graduate from London, joined our CPD Accredited Mini MBA in Applied Professional Forex Trading to deepen her understanding of currency markets. Through the course, she mastered the interplay between economic cycles and forex volatility, learning how to align her trades with key sessions and data releases. By integrating her learning into a structured strategy, she began navigating London and New York sessions with more clarity and confidence.

Technical Vs Fundamental Market Views

Feature	Fundamental Analysis	Technical Analysis
Focus	News events, economic data, interest rates	Price patterns, trends, and chart signals
Tools Used	Economic calendar, central bank statements	Indicators, trendlines, support/resistance zones
Use Case	Medium/long-term positioning	Short-term entries, timing trades

Skilled traders blend both approaches to navigate volatile forex trading markets effectively.

Frequently Asked Questions

What are forex trading markets?

Forex markets are global platforms where currencies are bought and sold, operating 24/5 across multiple trading sessions.

Which currencies are most traded in forex markets?

Major currencies like USD, EUR, JPY, GBP, AUD, CAD, and CHF dominate forex trading due to liquidity and stability.

What time is best to trade forex?

The best time is during the London and New York overlap (1 PM – 5 PM GMT), when market activity is highest.

How are forex trading markets different from stock markets?

Forex is decentralised and trades 24/5, while stock markets are centralised and operate during limited hours.

Do I need a broker to access the forex markets?

Yes, a regulated forex broker provides the trading platform, access to the interbank market, and execution tools.

Gain a strategic edge in the global forex trading markets with our expert-led Trading Courses — designed to help you understand, analyse, and succeed in every session.

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