Forex Forex

Forex is an abbreviation commonly used for "foreign exchange" or "currency exchange" and is often used to describe the trading in the forex market by investors and speculators.

For example, imagine a situation in which it is expected that the value of the US dollar it will weaken against the euro. A forex trader in this situation will sell dollars and buy euros. If the euro strengthens, the purchasing power to buy dollars has increased. The trader now can buy back more dollars than you had to begin at a profit.

This is similar to stock trading. A stockbroker buy a stock if you think the price will increase in the future and will sell a stock if its price will fall think in the future. Similarly a forex trader will buy a currency pair if you expect the exchange rate to increase in the future and sell a currency pair if you expect the exchange rate to fall in the future.