Forex, or foreign exchange, is the global decentralized or over-the-counter market for the trading of currencies. It is the world's largest financial market,...
Forex trading involves simultaneously buying one currency while selling another. Traders aim to profit from fluctuations in exchange rates between currency pairs, speculating on whether one currency will strengthen or weaken against another.
The Forex market operates electronically, over-the-counter, meaning there's no central exchange. Participants trade through brokers, banks, and financial institutions. Currencies are always traded in pairs (e.g., EUR/USD), and prices are influenced by global supply and demand.
Forex trading involves significant risks, including high volatility, leverage risk (which can amplify both gains and losses), and the potential for substantial capital loss. It's crucial for traders to use robust risk management strategies and understand market fundamentals.
Currency rates are influenced by various factors, including interest rates, inflation, economic growth (GDP), political stability, trade balances, and major news announcements from central banks, governments, and international organizations.