WHAT IS FOREX?

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Foreign Exchange (Forex) is the arena where a nation's currency is exchanged for that of another. The foreign exchange market is the largest financial market in the world, with the equivalent of an estimated $4.3 trillion changing hands daily and growing. Unlike other financial markets, the Forex market has no physical location and no central exchange.
Forex is simply a global network of Central banks, Interbank & Retail brokers, Hedge funds, Corporations, Speculators and Individuals trading one currency for another. Forex market operate on a 24-hour basis, spanning from one zone to another in all the major financial centers, Five days a week.


For example, imagine a situation where the U.S. dollar is expected to weaken in value relative to the euro. A forex trader in this situation will sell dollars and buy euros. If the euro strengthens, the purchasing power to buy dollars has now increased. The trader can now buy back more dollars than they had to begin with, making a profit.
This is similar to stock trading. A stock trader will buy a stock if they think its price will rise in the future and sell a stock if they think its price will fall in the future. Similarly, a forex trader will buy a currency pair if they expect its exchange rate will rise in the future and sell a currency pair if they expect its exchange rate will fall in the future.

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