What is Forex Trading?

Forex trading, or foreign exchange trading, is the act of exchanging one currency for another at an agreed-upon price.

Meaning of Forex Trading

Foreign currency trading involves individuals, businesses, and central banks exchanging currencies. While some foreign exchange is done for practical purposes, such as for international trade, most currency conversion is done to make a profit. Due to the high volume of money traded every day, currency prices can be very volatile, making forex trading an attractive option for traders.

How Does Forex Trading Work?

Unlike stocks or commodities, forex trading occurs directly between two parties in an over-the-counter (OTC) market, rather than on a centralized exchange. The global forex market is managed by a network of institutions located in four major forex trading hubs in different time zones: London, New York, Sydney, and Tokyo. Because there is no central location, forex trading is available 24 hours a day, seven days a week.

It's important to understand common forex trading terms before beginning to trade in the forex market to make the most informed trading decisions.


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