Welcome to Lesson 3 of our free Forex Trading Course Toronto at The Academy of Financial Markets! Having covered the basics of forex trading and currency pairs, we now explore the mechanics of the forex market itself. Understanding its structure and operations is crucial for anyone looking to learn Toronto Forex and succeed in our Stock Trading Course Toronto.

The Structure of the Forex Market

The forex market, also known as the foreign exchange or FX market, is a global, decentralized marketplace where currencies are traded. Unlike stock markets with centralized exchanges like the New York Stock Exchange, forex operates over-the-counter (OTC) through a network of banks, brokers, and financial institutions. This decentralized nature allows trading 24 hours a day, five days a week, across major financial centers like London, New York, Tokyo, and Sydney. Our Online Forex Mentorship helps you navigate this global market with confidence.

With a daily trading volume exceeding $7 trillion, forex is the world’s largest and most liquid financial market. This liquidity ensures tight spreads and quick trade execution, making it attractive for traders. Participants include banks, corporations, central banks, hedge funds, and retail traders like you. At The Academy of Financial Markets, we emphasize how this structure offers opportunities for Forex Trading Academy Toronto students.

Key Players in the Forex Market

The forex market involves various participants, each playing a distinct role:

• Commercial Banks: Major banks like JPMorgan and Deutsche Bank facilitate most forex transactions, providing liquidity and setting exchange rates.
• Central Banks: Institutions like the Federal Reserve influence currency values through monetary policies, such as interest rate changes.
• Hedge Funds and Investment Firms: These entities trade large volumes, often for speculative purposes, impacting market trends.
• Retail Traders: Individual traders, supported by brokers, represent a growing segment, accessing the market through platforms. Our Forex Mentor programs guide retail traders to trade effectively.

How Trades Are Executed

Forex trading occurs through brokers who provide access to trading platforms. When you place a trade, your broker matches your order with a counterparty, such as another trader or a liquidity provider, in the interbank market. Trades are executed in lots—standard (100,000 units), mini (10,000 units), or micro (1,000 units)—allowing flexibility for traders. For example, buying one standard lot of EUR/USD at 1.1050 means purchasing 100,000 Euros, with profits or losses based on price movements measured in pips. Our Financial Markets Education Toronto covers trade execution in detail.

Market Hours and Sessions

The forex market operates 24/5, starting Sunday at 5 p.m. EST with the Sydney session and closing Friday at 5 p.m. EST after the New York session. The major trading sessions—Asian, European, and North American—overlap, creating periods of high volatility, such as the London-New York overlap (8 a.m. to 12 p.m. EST). Understanding these sessions is key for timing trades, a skill we teach in our Learn Forex Toronto curriculum.

Currency prices are driven by economic data (e.g., GDP, employment reports), geopolitical events, and central bank policies. For instance, a Bank of Canada rate hike could strengthen the CAD, affecting USD/CAD. Staying informed about these factors is essential for success, and our Forex Trading Course Toronto equips you with the tools to analyze market movements.