Currencies are traded on the Foreign Exchange market, also known as Forex. This is a
decentralized market that spans the globe and is considered the largest by trading volume and
the most liquid worldwide. Exchange rates fluctuate continuously due to the ever changing
market forces of supply and demand. Forex traders buy a currency pair if they think the
exchange rate will rise and sell it if they think the opposite will happen. The Forex market
remains open around the world for 24 hours a day with the exception of weekends.
Before the Internet revolution only large players such as international banks, hedge funds and
extremely wealthy individuals could participate. Now retail traders can buy, sell and speculate on
currencies from the comfort of their homes with a click through online brokerage accounts.
There are many tradable currency pairs and an average online broker has about 40.