The FX Market is an over-the-counter (OTC) market, meaning that there is no central exchange and clearing house where orders are matched. Currencies are traded at different market makers with different levels of access:
Interbank Market – Large commercial banks trade with each other through the Electronic Brokerage System (EBS). In this market, banks submit their quotes only to the banks with which they trade. This market is not directly accessible to retail traders.
Online Market Maker – Retail investors can access the FX market through online market makers who primarily trade from the US and UK. These market makers typically have relationships with several banks on the EBS; the larger the market maker’s trading volume, the more relationships it likely has.
Forex is a market that trades actively as long as banks are open in one of the world’s major financial centers. This effectively happens from the start of Monday morning in Tokyo until Friday afternoon in New York. In terms of GMT, the trading week runs from Sunday night to Friday night, or roughly 5 days, 24 hours a day.
Price Reporting Trading Volume
Unlike many other markets, there is no consolidated tape in Forex, and transaction prices and volume are not reported. It is possible to trade simultaneously between different parties in the market at different prices. Good pricing through a market maker depends on the market maker being closely connected to the larger market. However, pricing is usually relatively close between market makers and the main difference between Forex and other markets is that there is no data on the volume traded in any time frame or at any price. Volume in open interest and even currency futures can be used as a proxy, but they are by no means perfect.