What is forex trading & how does it work?

At its simplest, forex trading is similar to the currency exchange you may do while traveling abroad: A trader buys one currency and sells another, and the exchange rate constantly fluctuates based on supply and demand. Currencies are traded in the foreign exchange market, a global marketplace that’s open 24 hours a day Monday through Friday.

What is a world forex market?

An interesting aspect of world forex markets is that no physical buildings function as trading venues. Instead, it is a series of connected trading terminals and computer networks. Market participants are institutions, investment banks, commercial banks, and retail investors from around the world. Who Trades on It?

What currency is used in forex trading?

While there are more than 170 currencies worldwide, the U.S. dollar is involved in a vast majority of forex trading, so it’s especially helpful to know its code: USD. The second most popular currency in the forex market is the euro, the currency accepted in 19 countries in the European Union (code: EUR).

Do commercial and investment banks trade Forex?

Commercial and investment banks still conduct most of the trading in forex markets on behalf of their clients. But there are also opportunities for professional and individual investors to trade one currency against another. Forex is traded primarily via spot, forwards, and futures markets.