Forex (FX) is the global foreign exchange market where currencies are traded against each other. As the world’s largest financial market with daily turnover exceeding $6 trillion, forex operates 24 hours a day across major financial centers. Participants include central banks, commercial banks, corporations, hedge funds, and individual traders seeking to exchange currencies for trade, investment, or speculation.

Forex trading involves currency pairs where one currency is bought while another is sold simultaneously. Major pairs like EUR/USD, GBP/USD, and USD/JPY dominate trading volume due to high liquidity and tight spreads. Forex prices are influenced by interest rates, economic data, political events, and central bank policies, creating opportunities for both hedging and speculation.

Real-world example: A multinational corporation exchanges $10 million for Euros at 1.1050 to pay European suppliers, while a trader simultaneously buys EUR/USD expecting European Central Bank policy changes to strengthen the Euro.