An abbreviation for “foreign exchange“. It is a general term referring to trading activities and transactions that take place in the currency market (FX market). The FX market is a worldwide, decentralized, over-the-counter (OTC) financial market where counterparties sell and buy currencies for different purposes (securing currency requirements, investment, hedging, speculation, etc). The physical structure of the FOREX market consists of electronic communication networks (ECNs) between banks, companies, speculators, etc. In this sense, the FOREX market is made up of several online markets on separate networks. Unlike shares and other instruments, including most derivatives (such as futures and options), FX transactions are not executed on an exchange floor. Instead, buyers and sellers enter into electronic contractual agreements in order to exchange specific currencies with counterparties. Therefore, currency contracts traded in FX are typically classified as “off-exchange” (OTC) products.
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