What is Forex?

The word Forex stands for foreign currency exchange, where currency of one country is exchanged for the currency of the other. In other words, the Forex market is the place where currencies are bought and sold. The major players involved in this trade are banks, institutional investors, currency speculators, corporations, governments, other financial institutions and retail investors. Traders speculate on the fluctuations in exchange rates and take advantage to make profits. Most currencies in the world no longer have fixed exchange rate, so their values or prices are constantly fluctuating. For example when a country is experiencing economic boom its economic value will generally be strong or high, but when it is facing economic crisis or downturn its currency value comes down. Since such changes and fluctuations are happening every day to every currency, there is a high potential for financial traders to make money. They buy the currency whose value is rising and exchange with the one whose value is falling.