Forex is the world's largest and most liquid financial market. The 24-hour operation highlights global economic interconnectedness. A single example. Many foreign currency markets are spread over this massive business. All have different objectives and attract other players, from large banks to small merchants.

Trading currencies requires knowledge of foreign exchange markets. Major foreign currency markets include spot markets. Spot markets trade fast-delivery currencies. Deals are made "on the spot," thus the name of this market. Supply, demand, economic data, political events, market sentiment, and other factors determine the exchange rate, which sets prices. Market mood and competition matter. Short-term traders and speculators benefit from currency changes on the spot market due to its liquidity and rapidity. Because spot market exchange rates are high.

FX forward markets are important beyond spot trading. Currency settlement contracts in this market are future-dated. Advanced contracts are customizable buyer-seller agreements. Legal documents are advanced contracts. These contracts provide traders with a current exchange rate for a future transaction to manage currency volatility. Thus, they lower risk. International corporations utilize advance contracts.

Pre-securing an exchange rate may help corporations avoid currency volatility and stabilize finances. Forwards markets function like futures. Regulations apply to exchange-traded conventional contracts.