A Detailed Overview of Forex Market

Introduction
The following facts and figures relate to the foreign exchange market. Most of the information comes from the Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity conducted by the Bank for International Settlements (BIS) in April 2004, and published in March 2005. 52 central banks and monetary authorities participated in the survey, collecting information from approximately 1200 market participants.
Structure
Decentralised, over-the-counter market, also known as the 'interbank' market
Main participants: Central Banks, commercial and investment banks, hedge funds, pension funds, corporations & private speculators
The free-floating currency system began in 1973, and was officially mandated in 1978
Online trading began in the mid to late 1990's

Source: BIS Triennial Survey 2004
Trading Hours
24 hour market
Sunday 5pm EST through Friday 4pm EST. Rollover at 5pm EST
Trading begins in New Zealand, followed by Australia, Asia, the Middle East, Europe, and America

Size
Largest market in the world
$1.9 trillion average daily turnover, equivalent to:
More than 10 times the average daily turnover of global equity markets 1
40 times the average daily turnover of the NYSE 2
$300 a day for every man, woman, and child on earth
An annual turnover more than 10 times world GDP 3
The spot market accounts for about one-third of daily turnover
1. About $167 billion - World Federation of Exchanges aggregate 2004 2. About $46 billion - NYSE 2004 3. About $36 trillion - World Bank 2003

Source: BIS Triennial Survey 2004
Major Markets
The US & UK account for more than 50% of turnover
Major markets: London, New York, Tokyo
Trading activity is heaviest when major markets overlap
Nearly two-thirds of NY activity occurs in the morning hours while European markets are open 4 4. NY Federal Reserve
Average Daily Turnover by Country
Concentration in the Banking Industry
16 banks account for 75% of turnover in the U.K.
11 banks account for 75% of turnover in the U.S.
11 banks account for 75% of turnover in Japan
Note: The reference here is to individual banking offices rather than banking organisations.
Source: BIS Triennial Survey 2004
Trading
An estimated 95% of transactions are speculative
More than 40% of trades last less than two days
About 80% of trades last less than one week
Brokers research: 90% of traders lose money, 5% break even, 5% make money
Technical Analysis
Commonly used technical indicators:
Moving averages
RSI
Fibonacci retracements
Stochastics
MACD
Momentum
Bollinger bands
Pivot point
Elliott Wave
Currencies
The US dollar is involved in approximately 90% of all foreign exchange transactions, equivalent to over $1.5 trillion a day
Currency Codes
USD = US Dollar
EUR = Euro
JPY = Japanese Yen
GBP = British Pound
CHF = Swiss Franc
CAD = Canadian Dollar
AUD = Australian Dollar
NZD = New Zealand Dollar
Average Daily Turnover by Currency

N.B. Because two currencies are involved in each transaction, the sum of the percentage shares of individual currencies totals 200% instead of 100%.
Source: BIS Triennial Survey 2004
Currency Pairs
Majors: EUR/USD, USD/JPY, GBP/USD, USD/CHF
Dollar bloc: USD/CAD, AUD/USD, NZD/USD
Major crosses: EUR/JPY, EUR/GBP, EUR/CHF
Average Daily Turnover by Currency Pair
Source: BIS Triennial Survey 2004