Forex is the abbreviation for foreign exchange – the market in which one currency is converted into another. The forex market can also be referred to as the FX market or currency market. It is the world’s biggest financial market and one of the most liquid, with trillions of dollars in currencies traded every single day.
The vast majority of activity on the forex market is from traders who are attempting to make a profit by speculating on the market price – known as forex trading. Other market activity includes central banks and businesses, who trade forex in order to maintain money supply or facilitate international trade.
Forex is traded directly between the buyer and the seller in what is referred to as an over-the-counter (OTC) market. This means that forex is traded 24 hours a day, with few barriers to making trades.