The Forex market, also known as the foreign exchange market, is the largest financial market in the world, with more than $5 trillion in daily trading volume. The Forex market involves the simultaneous buying of one currency and selling of another. Investors in the Forex market can take advantage of price movements in one currency relative to another to speculate and generate profits. Many traders also take advantage of the fact that the Forex market has no central exchange, meaning they can trade currencies around the clock.
The capital market consists of two distinct markets, the money market and the capital market. The money market consists of short-term debt instruments, such as treasury bills, and is used to finance short-term capital needs. The capital market consists of longer-term debt and securities, such as stocks and bonds, and is used to finance large, long-term capital investments. While the Foreign Exchange (Forex) market deals strictly in the buying and selling of currencies, both the money market and the capital market may involve securities denominated in different currencies, a situation that allows for a greater degree of nuance in speculation and risk management for traders.