. The foreign exchange market is the market which accommodates the currency preferences of the parties involved and helps convert one currency into the other currency.
CLASSIFICATION OF FOREIGN EXCHANGE MARKET
1. The Spot Market:
The spot market or cash market is a commodities or securities market in which goods are sold for cash and delivered immediately. Contracts bought and sold on these markets are immediately effective.
2. The Forward Market:
The forward market is the over-the-counter financial market in contracts for future delivery, so called forward contracts. Forward contracts are personalized between parties.
SCOPE:
The foreign exchange market is worldwide in scope and the major world’s trading centers are in
SPECULATIORS
Some people and businesses are in the business of taking risks to make money for the possibility of a reward. The parties represent another pillar of derivative market and are known as speculators. Speculators are people who take positions in the market and want to assume risks to profit from exchange rate fluctuations. They may take a long position or a short position in a forward contract. Their extent of participation on a deal depends on the prevailing forward rates and their expectation for spot exchange rates in the future. Speculators use derivatives to get extra leverage
Top 10 currency traders
% of overall volume, May 2009
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| Rank | Name | Market Share |
| 1 | Deutsche Bank | 20.96% |
| 2 | UBS AG | 14.58% |
| 3 | Barclays Capital | 10.45% |
| 4 | Royal Bank of Scotland | 8.19% |
| 5 | Citi | 7.32% |
| 6 | JPMorgan | 5.43% |
| 7 | HSBC | 4.09% |
| 8 | Goldman Sachs | 3.35% |
| 9 | Credit Suisse | 3.05% |
| 10 | BNP Paribas | 2.26% |
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