Is Forex really decentralized?

I viewed several social media and saw some people are always in a confusion whether Forex is actually decentralized or not?

It seems to me that most people on most social media are confused about most things, most of the time.

Spot forex is indeed a decentralized market (though currency futures are not).

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NOT AT ALL! forex is the market where you trade, connecting from a broker, which is a center, that broker connects you to another center called liquidity provider and there u trade on currencies which belongs to centers called countries! I think you are mistaking crypto with forex

This topic is covered in our School of Pipsology, Where Are Retail Forex Traders Actually Trading? - BabyPips.com

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I think what they usually said is that the volume in forex is not accurate because of we have so many brokers out there and there’s no 1 entity that monitoring all the orders to get the accurate volume etc. That’s correct. But, there is no need for the volume to be super accurate in my opinion. You can use IBKR, FXCM, Oanda to gauge the volume because they are one of the biggest brokers in the world.

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… unless you’re trading from volume bars, rather than from timed bars, of course! :grinning_face_with_smiling_eyes:

you can indeed, and a good idea, too - or, for a few dollars per month, you can subscribe as a non-professional subscriber to a CME data-feed (you just have to self-certify that you’re not trading other people’s assets professionally) and have live access to the actual volumes of the forex futures markets

many people do find that very useful indeed for trading spot forex

i certainly agree that Oanda’s volume is a very realistic and reasonable substitute for people not actually wanting to trade from volume bars, though :sunglasses:

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I don’t think that’s what the poster meant when asking if forex was decentralised. Most people view a centralised market as for example the New York Stock Exchange, through which all trades of shares issued by companies registered with the NYSE must be executed. so you cannot for eexample by NYSE shares through the Stockholm stock exchange. There is not a parallel in forex.

Most private retail forex traders’ brokers have not even an indirect link with foreign currencies. They handle bets, on exchange rates not purchases and sales of currencies.

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Yes, Forex itself is decentralized. It operates through a global network of banks and financial institutions, but because we are working with brokers, it’s not decentralized anymore.

I think those who may have the opinion that the forex market is not decentralized probably don’t understand what a decentralized market is.

Forex is indeed a decentralized market because it involves no middleman. Note that when you talk about forex trading, have institutional forex trading in mind, where the big boys swap currencies.

Retail forex is just a simulated market made by our brokers (“dealers,” as they’re supposed to be called) or CFD providers (rolling spot fx contracts) that gives us the chance to make money from predicting the price movement of the market; hence, the brokers are not even brokers as they claim to be.

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I’m sure that’s right.

I think it’s often because they’ve decided it’s comfortable to believe the lines they’re spun by counterparties pretending to be brokers.

The idea that it’s somehow not decentralized any more “because we’re working with brokers” perhaps illustrates that?

It’s totally wrong anyway.

This myth just won’t die out.

Firstly, that very rarely happens.

Secondly, even when it does, the customer isn’t in any way “connected” with the LP.

Thirdly, no currencies change hands.

Fourthly, the broker often owns the so-called LP anyway, or vice-versa.

People need to understand that when they “trade” with a spot forex “broker”, no currencies actually change hands!

Others will continue repeating misinformation as always, but for those actually willing to learn something this link will help a lot:

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Absolutely. Your key phrase is, “no currencies actually change hands”.

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Yeah, and that’s because many just don’t want to be patient to acquire the right knowledge, but are eager to start trading and getting their own share of the $6.6 trillion circulating daily in the market…so they heard.:joy:

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Because of the complex structure of the foreign exchange market. Forex is indeed decentralized in the sense that there is no single, centralized exchange where all currency trades occur.

However, while the trading itself is decentralized, there are centralized entities involved, such as major banks and financial institutions, that act as liquidity providers.