types of forex markets

How Many Markets Forms Forex

Fri Sep 18 2020 14:25
Forex is just a single currency trading market? What is the physical location of this largest foreign exchange market in the world? You may feel confused about such questions about forex markets. Don't worry, we are here to tell you all about the exchange market. Not only we will cover types of forex markets in this post. But also we will tell you about two different levels of the currency market and how to trade them. So these all aspects are different from each other and they have different meanings also. What do they mean and how do they participate to complete the largest financial market? If you have started learning how to trade, everything will be cleared in this post. So share this post with more people to spread the trading forex and commodities knowledge. 

Forex Markets: It has two levels 

Before we tell you about the types of forex markets you must know about the two basic categories of online trading markets. No one will tell you because the so-called expert forex brokers think that these fx-market categories don't matter for individual currency traders. They only tell you about one category, section, or level. But the other one is ignored just considering it less important for fx trading beginners. 

#1. First: Interbank Market 

The first portion of the forex market is the interbank market. You can call it the first level of the forex market. As its name states, this is the currency trading market where the trade will be held between central banks. So in this interbank market, major banks from all over the world are members. They trade currencies with each other to make it a profitable process. Various currencies like USD and Euro are traded in the interbank market. This interbank market doesn't have too many forex trade parties. But this market has a high volume of exchange markets. The minimum trade is one million, but almost every bank is trading more than ten million up to a hundred million. This side of the market is important for individuals because it impacts the exchange rate in the financial market. 

#2. Second: Over-The-Counter Market (OTC) 

The second part or portion of the global market is over the counter market. The OTC is just the opposite of the interbank market. There are no banks in these financial markets. There are individuals, groups, and companies as traders. This live trading market has far more members than the interbank trading accounts. But the activity of this market doesn't impact the exchange rate and volatility the most. Also, less amount of money is traded in this market even though the number of members is more than the inter-bank market. 

Know Basics Of Foreign Exchanges 

Let's tell you some basics of the foreign exchanges and forex trading strategy. You will understand the types of forex market after you understand the basics of the trading systems. Maybe you don't know that the largest financial market in the world doesn't have any physical address. No physical location is available for this market. No, it is not due to a lack of funds. Because the forex market has turned over 6.6 trillion per day. The other reality of this trading currency market is that it is a decentralized trading system. No regulatory authorities are there to regulate the market in a common place. When it comes to the timing of the trading services, then you will find that foreign exchanges work 24 hours for 5 days. There is no time limitation on the financial markets. 

Major Trading Sessions 

Types of forex markets are important to know for every trade forex person. But there are some trading sessions also. If you don't know about the trading sessions. Most of the professional traders consider these three trading sessions very seriously. However, the newcomers don't know much about these sessions. That is why they miss a lot of technical analysis opportunities due to a lack of knowledge. 

#1. Asian Trading Session 

The foremost market for the forex traders is the Asian trading session. This forex online session has the center point in Tokyo, Japan. Asian market is the first to open so many traders keep an eye on this market for real-time updates. They also try to experiment with their strategies after looking at this market.  

#2. European Trading Session 

This trading session is operated from London. We can say that this trading session has the most market share. It is the biggest market in forex. Almost 34 percent of forex trading is held in European trading sessions. 

#3. US Trading Session 

The US trading session is known as the second-largest market or session in the market. Almost 16% of trades are held during this session. The major feature of this session is the overlap of European sessions. When European session’s traders are going out of the market, the US traders enter the new session. It produces huge opportunities for US traders. 

Major Foreign Exchange Markets:  

Different types of foreign exchange markets are there in the world. Swaps market, options market, spot market, futures market, and forward markets are there. These markets have different strategies and styles of trading. Read this information to know everything about below mentioned foreign exchange markets. 

#1. Swaps Market 

In this forex market, currency swaps are used to earn interest on currency pairs. This market is different from day trading. Here you don't have to start and end trade on the same day. Rather than doing trade on the same day, you have to hold the assets overnight to gain interest in it. 

#2. Options Market 

In this list of types of forex markets, the second position is held by the options market. You may know that an option is a kind of contract. This type of market call option is used to buy and the put option is used to sell the currency pairs in the forex. 

#3. Spot Market 

You can assume the working procedure of this market from its name. In this forex market, the transactions are held on the spot. All transactions will be there on the spot. The current exchange rate of the market is considered to settle the trade between traders. 

#4. Future Market 

Future markets are providing some kind of safety to the individual forex trader. It makes trading centralized using various other markets. Such kinds of markets are using countries that have restrictions on forex trading. Some Asian countries, like India, have future markets. These markets have the same contacts as the forward market. But they are standardized and centralized with the concern from stock exchanges and other markets. 

#5. Forward Market 

It is like fixing a trade for the future but without any security charges. Two parties agree on a contract to trade on a particular day in the future. This type of trading is similar to the futures market.  


There are many types of forex markets in the world. But which one is the best? This is not a question. But we can call it a debate. Different opinions are there about different types of markets and their trading styles. Now you may ask which one is good for you. Then it is all up to you which one you choose to go with. You can analyze various forex market types and choose one which looks more suitable for you. You must consider your experience, goals, and ability before you choose any kind of market to start trading. As a beginner, first you need to learn about every trading market and then decide.

Related Articles


Write your comment here...

Start Getting Free Signals

Live Chat

10,040 registered users
550 users chatting now

Start Getting Free Signals

20,000 VIP Pips Won on VIP