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What is Forex
What is Forex?
(FX Market explained)
If you’ve ever exchanged money for a vacation (EUR to USD, for example), you’ve already interacted with the idea behind forex.
Forex market meaning
- Countries trade with each other
- People travel and exchange money
- Companies pay suppliers in other currencies
- Investors and traders speculate on currency moves
What is FX trading?
FX trading is simply another way to say forex trading. FX = foreign exchange.
What is forex trading (in plain English)
Forex trading is trying to profit from changes in currency exchange rates. Example with EUR/USD: buy if you expect EUR to strengthen vs USD; sell if you expect it to weaken.
Forex market size (quick numbers)
The forex market is the world’s largest financial market. “Market size” is usually described in daily turnover (the notional value traded per day), not the number of individual trades.
- ~$9.6 trillion per day in average daily FX turnover (April 2025).
- That’s up from ~$7.5 trillion per day in April 2022.
- Spot FX accounted for about $3.0 trillion/day (around 31% of total FX turnover).
- The US dollar (USD) was on one side of roughly 89% of all FX trades.
- Trading is concentrated in major financial hubs: the UK, US, Singapore, and Hong Kong together handled about 75% of global FX activity.
Currency pairs: how forex prices are quoted
A pair has two sides: Base currency (first) and quote currency (second). Forex price = how much of currency #2 you need to buy 1 unit of currency #1.
How many currency pairs are there?
In theory there are many possible combinations, but in practice most trading volume is concentrated in a small set of pairs.
- Most retail traders focus on the major pairs (like EUR/USD, USD/JPY, GBP/USD) because they’re typically the most liquid.
- The top 10 most traded currency pairs all involve the US dollar (USD).
- Beyond majors, you’ll also see minors (no USD) and exotics (emerging-market currencies), which often have wider spreads and higher risk.
What moves the forex market?
- Interest rates (central bank decisions)
- Inflation and economic growth
- Employment data
- Political uncertainty / risk sentiment
- Big global news events
When is the forex market open?
Often described as 24 hours a day, 5 days a week. Activity changes through the day as major centers open and close.
How do people trade forex today?
Most beginners trade through a broker and a platform (often CFDs in many regions). The platform shows charts and order buttons; the broker handles execution and pricing.
Costs and risks beginners should know
Main cost is the spread. Leverage is a risk multiplier. Risk control (stop loss and small size) is non-negotiable.
Simple example: a forex trade in 60 seconds
Step 1
Buy EUR/USD if you believe it will rise.
Step 2
Set a stop loss (where you admit you’re wrong).
Step 3
Set a take profit (your target).
Step 4
Let price hit either target (profit) or stop (limited loss).
