forex

Forex – foreign exchange market, or currency market – is the market where one currency is traded for another, and is one of the largest markets in the world. Forex is the world’s most traded market, with an average turnover in excess of US$4 trillion per day and is open 24-hours a day from Sunday evening through to Friday night.

Currencies are traded worldwide in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney - across almost every time zone. This means that when the trading day in the U.S. ends, the forex market begins anew in Tokyo and Hong Kong.

Forex is decentralized and transactions are conducted by several market participants in several locations. It is rare that any two currencies will be identical to one another in value, and it's also rare that any two currencies will maintain the same relative value for more than a short period of time.  In forex, the exchange rate between two currencies constantly changes.

Similar to stock traders, a forex trader buys a currency pair if they expect its exchange rate to rise in the future and sell a currency pair if they predict its exchange rate will fall in the future.

There are actually three ways that institutions, corporations and individuals trade forex: the spot market, the forwards market and the futures market.