Forex trading, also known as foreign exchange trading or FX trading, refers to the buying and selling of currencies in order to profit from changes in exchange rates. Every forex trade involves two currencies, because one currency is exchanged for another at an agreed price.

For example, when trading EUR/USD:

• You are buying Euros (EUR)
• And selling US Dollars (USD)

If the value of the Euro rises against the US Dollar, the trade may result in a profit. If it falls, the trade may result in a loss.

The forex market is the largest financial market in the world, with daily trading volumes far exceeding those of stock or futures markets. Unlike stock markets, forex does not operate through a central exchange. Instead, it functions through a global network of banks, financial institutions, brokers, and individual traders.

Forex trading is commonly used for:

• Facilitating international trade and investments
• Currency conversion for global businesses
• Hedging against currency risk
• Speculative trading by individuals and institutions