In the FX market, there is no regulated exchange where trading takes place like the stock market. It is more like a network of banks operating among themselves. There is less transparency and that is why the FX market place remains so secretive and elusive.
At the heart of the FX market place is the electronic broking system. This is a electronic system, where buyers and sellers try to find each other through price discovery. Buyers will place bid for amount they want to buy in the respective currency pair. They can also buy the offers put up by the sellers.
There are a few electronic broking systems in use today like FXall, Reuters dealing system and Bloomberg just to name a few. Banks may also call another bank over a dealing system to ask the other for a direct quote on a specific currency pair and a specified amount. This is how dealing and trading takes place between banks.