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How does forex trading work?

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Quick answer

Forex (foreign exchange) trading is buying one currency while selling another, aiming to profit from changes in their exchange rate. It's the world's largest, most liquid market, trading around the clock — but it's fast-moving and risky. You trade one currency against another in pairs.

Step by step

  1. You trade one currency against another in pairs.
  2. Profit comes from shifts in the exchange rate.
  3. It's the largest, most liquid financial market.
  4. It trades 24 hours on weekdays and can be very risky.

People also ask

How does forex trading work?
You buy one currency and sell another as a pair, profiting if the exchange rate moves in your favor.
Why is forex trading risky?
Prices move fast and traders often use heavy leverage, which can amplify losses quickly.
What is a currency pair?
Two currencies quoted together, like EUR/USD, showing how much of one is needed to buy the other.