What is forex?
Forex, short for foreign exchange, is the global market where individuals, businesses, and financial institutions trade currencies. It is the largest and most liquid financial market in the world, with an average daily trading volume of around $6 trillion. The forex market operates 24 hours a day, five days a week, allowing participants to trade currencies at any time.
Traders speculate on the price movements of different currency pairs, aiming to profit from the fluctuations in exchange rates. Forex trading can be done through various platforms, including banks, brokers, and online trading platforms.
Example of forex
Let’s say you live in the United States and you plan to travel to Europe. You exchange your US Dollars for Euros at an exchange rate of 1.2. This means that for every US Dollar, you will receive 1.2 Euros. After your trip, if the exchange rate has changed to 1.3, you can exchange your Euros back into US Dollars and make a profit.
So, if you had exchanged $1000 for 1200 Euros, you would get $1300 when you convert your euros back to dollars.
This is a basic example of how forex trading works at a personal level.