- What is it? The currency market, often referred to as the Forex (foreign exchange) market, is where currencies from different countries are bought and sold. It’s the largest and most liquid financial market globally, with a daily trading volume exceeding trillions of dollars.
- Key Players: Participants in the currency market include central banks, commercial banks, financial institutions, multinational corporations, governments, and individual retail traders.
- Currency Pairs: Currencies are traded in pairs. A currency pair consists of two currencies, such as EUR/USD (Euro/US Dollar). When you trade a currency pair, you are essentially buying one currency and simultaneously selling another.
- Market Dynamics: Currency prices are influenced by various factors, including economic data, interest rates, geopolitical events, and market sentiment. Exchange rates fluctuate based on the relative strength of one currency against another.