Foreign exchange, or Forex for short, is the “place” where currencies are traded. Currency trading is the exchange of one type of currency for another. In the forex market, currencies are traded in pairs. When a trader buys a currency, he or she is selling another currency at the same time.
Currency values fluctuate based on various economic, political and environmental factors. Forex traders sell and buy currencies in an effort to take advantage of these changes in value. The forex market has no physical location or central exchange as it is a global, decentralized market and trades 24 hours a day, 5 days a week.
No other market in the world trades more than forex, which is why there are many opportunities for traders.
More on Beginner's Education
What is a Pip?
A point in price – or pip for short – is a measure of the change in the exchange rate of a currency pair. It is the smallest unit of measurement we use when trading currencies. Most currency pairs are measured to five decimal places. For pairs such as EURUSD, GBPUSD a...
What is a Bid Price/What is an Ask Price?
The Bid price is the price a forex trader is willing to sell a currency pair for. Ask price is the price at which a trader will buy a currency pair. Both of these prices are given in real-time and are constantly updating. So for example, the British pound against the...
What is Forex Spread?
What are Base and Quote Currencies?
In forex, currencies are always traded in pairs. The first currency is called the base currency and the second currency is called the quote currency. For example, EURUSD, means that the base currency is the Euro and the quote currency is the US Dollar. The quote...
