What Is Forex and How Does It Work?

Forex is short for Foreign Exchange, the trading of one currency against another. It is the largest financial market in the world by daily volume, and it runs around the clock five days a week as trading sessions pass from Asia to Europe to America.

What do you actually buy and sell?

In forex you do not buy a product; you trade the relationship between two currencies, called a currency pair. Take EURUSD, the euro against the US dollar:

The first currency in the pair is the base currency (the euro here).
The second is the quote currency (the dollar here).
A price of 1.1500 means one euro is worth 1.15 dollars.

If you expect the euro to strengthen against the dollar you open a buy position; if you expect it to weaken you open a sell. With CFDs you can trade in both directions, and a wrong call loses by exactly the same logic.

Why do prices move?

A pair's price is where supply meets demand across millions of participants: central and commercial banks, importers and exporters, funds and individual traders. The main drivers:

Interest rates and central-bank decisions.
Economic data: inflation, jobs, GDP.
Political events and sudden crises.
Market sentiment, appetite for risk, or flight from it.

That is why traders lean on the economic calendar: release times of the big numbers are known in advance, and the market usually moves hard around them.

How is movement measured? The pip

Price movement is measured in a small unit called a pip. In most pairs it is the fourth decimal place: EURUSD moving from 1.1500 to 1.1501 is one pip. What a pip is worth in dollars depends on your position size, covered in lots and pip value.

What to understand before your first trade

Forex is usually traded with leverage, which magnifies profit and loss alike, read spread and leverage explained.
Nobody predicts the market consistently; distrust anyone promising constant profits.
Money management, sensible position size and a stop loss, matters more than any forecast.
Start on a demo account until the platform's tools feel familiar, before risking real money.

In short

Forex is the currency-exchange market, open 24 hours five days a week.
You trade pairs: buy if you expect the base currency to rise, sell if you expect it to fall.
Prices move on rates, data, events and sentiment.
Leverage scales the outcome both ways; risk is inseparable from this market.

Explore the available currency pairs, see the trading conditions as published, and read the full risk disclosure before you start.