Glossary

Forex

Forex, also known as foreign exchange or FX, is the conversion of one country's currency into another. It forms the basis of forex trading, one of the world’s most-traded asset classes.

Foreign exchange (FX) meaning

Foreign exchange occurs globally between a network of banks, brokers and speculators. Unlike a stock exchange, there is no central location for these trades – instead the market takes place over-the-counter between two parties. This means the market trades 24 hours a day, five days a week, all over the world.

While the FX market is used by tourists and banks who want to exchange the currencies themselves, most market participants are looking to make money through speculation. They’d do this by adopting either a long or short position depending on whether they expect one currency’s value to go up or down compared with the other currency in a FX pair.

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