What is Forex?

What is Forex?

Foreign exchange, also known as ‘Forex’ or ‘FX’, is the exchange of one currency for another at an agreed price on the over-the-counter (OTC) market.

Forex is the world’s largest and most traded market with an average daily turnover of over $5 trillion.

How Forex Works

Forex trading is the act of buying one currency whilst selling another, usually for speculation purposes. Currency prices go up (appreciate) and go down (depreciate) against one another due to a number of factors which can include economics and geopolitics.

Forex traders aim to make a profit from these changes in the price of one currency against another by speculating on which way FX prices are likely to go in the future.

Example

Forex

What Affects Forex Prices?

The price of a currency pair can be affected by a number of different factors, from international trade or investment flows to economic or political conditions and this is what makes FX so interesting to trade.

High market liquidity means that prices can change very quickly in response to news and short-term events, creating endless trading opportunities for retail forex traders.