Forex trading is conducted over the counter, meaning there is no physical exchange of assets. The foreign exchange market is a global marketplace that operates 24 hours a day, including most U.S. What is forex trading and how does it work? Forex traders essentially attempt to buy low and sell high for a profit, but the asset they are trading is currency. Exchange rates among these currencies always fluctuate due to several factors, including supply and demand dynamics, changes in local economic conditions and the credibility of the governments backing the currencies.įoreign exchange, or forex, traders speculate on changing exchange rates by converting large sums of money from currency to currency, much like stock traders buy and sell different stocks. There are dozens of different fiat currencies around the world. Most international travelers have experienced the process of exchanging their native currency for the local currency of their destination. These markets are volatile and unpredictable, so risk management is critical.Trades can use leverage and margin to make big profits on relatively small positions.Forex traders make bets on fluctuations in global currency prices.
