What is Forex?

What is Forex?

The actual question is what is Forex, and how does it work?

Forex, or the foreign exchange market can be simply explained as the simultaneous buying of one currency and selling of another. It is basically a marketplace where currency trading takes place on a daily basis. The trading of these currencies are facilitated mostly by international banks and some other official institutions. A typical transaction would involve the buying of one currency by providing a certain amount of another currency.

At the moment Forex is one of the largest and most liquid, meaning you can easily buy or sell currencies without disrupting the price too much, financial markets in the world. The main purpose of the Forex market is to facilitate trade and investment.

Ok, so why would you want to do this? Well, it's simply really. The fluctuation of currencies implies that they are not all high or low at the same time. This means that the values of currencies, relative to other currencies, will also fluctuate. What I am getting at is this. It could happen that you buy a currency that is currently not very highly priced, then in a short while you could see an increase in its value. This is when you start thinking of selling and in the process you can make a lot of money.