Forex, also known as foreign exchange or FX, is the global marketplace where banks, institutions, businesses, central banks, governments, and individuals trade and speculate on national currencies. Forex trading is the process of exchanging one currency for another, with the aim of making a profit by speculating on whether one currency will rise or fall in value against the other. Forex markets exist as spot (cash) and derivatives markets, offering forwards, futures, options, and currency swaps.
Here are some key points to know about forex:
- Forex is the largest financial market in the world, with trades between foreign exchange dealers often involving hundreds of millions of dollars.
- Currencies trade against each other as exchange rate pairs, such as EUR/USD for trading the euro against the U.S. dollar.
- Forex trading offers constant opportunities across a wide range of currency pairs.
- Forex traders can use leverage to open a position by putting up only a portion of the full trade value.
- Forex terminology includes terms such as forex account, lot, leverage, and position.
Overall, forex trading is the process of exchanging one currency for another, with the aim of making a profit by speculating on whether one currency will rise or fall in value against the other. Forex markets are the largest financial markets in the world, and offer a wide range of opportunities for traders.
