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Forex refers to the simultaneous actual transaction of a single currency to a different one. The foreign exchange market, on the other hand, houses a set of trading relationships between various market participants and banks across the world. But the Forex market is considered as an informal trading market as opposed to the stock market of various countries or more so the global stock market. It is often referred to as the “interbank market”.

There is no central exchange or clearing house in the Forex market since it is referred to as an OTC or over-the-counter type of market. Meanwhile, the spot market houses trading relationships between banks across the globe and various Forex participants wherein they conduct purchases and marketing of currencies whilst taking into direct consideration the current market value of the currencies.