The financial world has so many terms for these complex instruments, like the CDO, CDS, BCMH, MBS, LBO and of course FX.
Foreign exchange or as it is commonly known, “forex” or “FX” is where you buy one currency while simultaneously selling another – that is, very simple, you’re exchanging the sold currency for the one you’re buying. The foreign exchange market is an over-the-counter market. (OTC)
Currencies trade in pairs, like the Euro-US Dollar (EUR/USD) or US Dollar / Japanese Yen (USD/JPY). Unlike stocks or futures, there’s no centralised exchange for forex. All transactions happen via phone or electronic network. The electronic network like BT Radianz.
Daily turnover in the world’s currencies comes from two sources: The statistics are a real eye opener:-

Foreign trade (5%).

Companies buy and sell products in foreign countries, plus convert profits from foreign sales into domestic currency. Or travelers changing cash or tourists spending overseas on credit or debit cards.

Speculation for profit (95%).

Traders trying to make a profit. Yes, professional gamblers account for 95% of the market. Naked Speculation. Most traders focus on the biggest, most liquid currency pairs. “The Majors” include US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. In fact, more than 85% of daily forex trading happens in the major currency pairs. The world’s most traded market, trading 24 hours a day, with average daily turnover of US$3.2 trillion, forex is the most traded market in the world.

Yes, Trillon. A large number. Let’s try and quantify the Trillion figure…..

US$3.2 Trillion = UK£2.0 Trillion. The UK GDP, the UK ANNUAL output is £1.4 Trillion, so forex turnover a DAY is larger that the UK GDP.
A true 24-hour market from Sunday 12 Noon UK / 5 PM US Eastern Time to Friday 12 Noon UK / 5 PM US Eastern Time, forex trading begins in Sydney, and moves around the globe as the business day begins, first to Tokyo, London, and New York. Unlike other financial markets, investors can respond immediately to currency fluctuations, whenever they occur – day or night. Banks located in the United Kingdom accounted for 37% of all foreign exchange market turnover, followed by the United States with 18% market share.