Forex trading is the act of buying or selling a currency on the current market. For example, a trader in the United States might wish to buy euros and sell dollars. If a trader has bought the euro, he or she can then sell the euro and purchase a different currency at a later date, hopefully trading at a profit.
It comprises the largest and most liquid market in the world with average daily trading volume of $3.9 trillion. In the foreign exchange market, a currency’s value is determined by the current demand and supply, just like any other product in the market. This means that when you trade in the forex market, you are not using your own money but rather speculate on swings in currency values. If you think one currency will rise in value, you can buy it and sell it at a later time for a higher price than what you bought it for.
After the U.S. dollar, the euro is the most actively traded currency in the foreign exchange market (forex). The forex market is open for trading 24 hours a day, 5 days a week, from 10:00 AM–5:00 PM on Sunday through Thursday, and from 6:00 PM until 4:00 PM on Friday.