What is Forex trading?

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Forex trading is the simultaneous buying of one currency and selling of another.

Currencies are quoted in pairs, for example Euro / US dollar (EUR/USD) and clients can speculate on changes in the relative prices between the two currencies. When one currency in the pair increases in value, it strengthens against the other. Forex is a popular way to trade on the financial markets as it is a 24 hour market. Forex trading opens at 4pm (ET) on Sunday and trades continuously through until 4pm (ET) on Friday.

With currency pairs, the first currency is often referred to as the base currency and the second currency is referred to as the quote, or variable currency. In any price quote, the figure tells you how much you would receive of the quote (second) currency for one unit of the base (first) currency.

The price tracks the base currency. When the price goes up the base currency goes up, the quote currency goes down and vice versa.

For example, a quotation of EUR/USD 1.28311 means that one Euro is exchanged for 1.28311 US dollars.

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