Forex (Foreign Exchange)
The global decentralized market for trading currencies, the largest financial market in the world.
Definition
The foreign exchange market (forex or FX) is the global decentralized marketplace where currencies are traded. With a daily trading volume exceeding $7.5 trillion, it is the largest and most liquid financial market in the world. Forex operates 24 hours a day, five days a week, across major financial centers (London, New York, Tokyo, Sydney). Currencies are traded in pairs (e.g., EUR/USD, GBP/JPY), where you simultaneously buy one currency and sell another. Major participants include central banks, commercial banks, hedge funds, corporations, and retail traders. Key concepts include pips, lots, leverage, and spreads. The most traded currency pair is EUR/USD, accounting for about 23% of daily volume.
Related Tools
Related Terms
Pip
The smallest standard price movement in forex trading, typically 0.0001 for most currency pairs.
TradingSpread
The difference between the bid (buy) and ask (sell) price of a security.
TradingLeverage
Using borrowed capital to increase the potential return of an investment.
ForexLot Size
The standardized quantity of a financial instrument in a single transaction.