Foreign exchange, or Forex for short, is quite simply a market where you’re able to exchange one currency for another. When you ‘sell’ a currency, there is a buyer for that currency somewhere else. Now, the exchange rate between those two currencies is what’s important when trading forex. The exchange rate is constantly fluctuating, and it’s these fluctuations that allow market speculators to earn from trading.
With a daily trade volume of $6.5 trillion dollars, the forex market itself is huge! It eclipses the likes of the New York Stock Exchange (NYSE) which, by comparison, has a trading volume of only $22.4 billion per day.
The Forex Market’s sheer size attracts a wide range of different participants, including Central Banks, Investment Managers, Hedge Funds, Corporations, Brokers and Retail Traders – with 90% of those market participants being currency speculators!