What Is the Forex Market? Currency Pairs, Pips and Leverage
What is forex?
The foreign exchange market is the largest financial market in the world. Trades are made on pairs: EUR/USD shows the value of the euro against the US dollar.
Pip and lot
A pip is the smallest usual price change of a pair, typically the fourth decimal. A lot is the trade size; a standard lot is 100,000 units.
Leverage
Leverage lets you open a position several times larger than the margin you deposit. It magnifies gains and losses alike, and high leverage can wipe out an account quickly.
Trading hours
The market is open almost 24 hours on weekdays as the Sydney, Tokyo, London and New York sessions follow one another. Volume and volatility peak when London and New York overlap.
Market size
According to the BIS Triennial Central Bank Survey of April 2025, average daily foreign exchange turnover reached $9.6 trillion, up 28% from $7.5 trillion in 2022. The US dollar was on one side of 89.2% of trades[1].
Risks
Leveraged trading carries a high risk and the whole amount deposited can be lost. This page is educational, not investment advice.
Frequently asked questions
- How large is daily foreign exchange turnover?
- According to the BIS Triennial Central Bank Survey of April 2025, average daily turnover reached $9.6 trillion, up 28% from $7.5 trillion in 2022[1].
- In how many FX trades is the US dollar involved?
- The US dollar was on one side of 89.2% of trades in the BIS 2025 survey[1].
Related guides
Sources
- OTC foreign exchange turnover in April 2025. Bank for International Settlements (BIS), Triennial Central Bank Survey, 2025. Accessed: 2026-10-22.