The Foreign Exchange Market (forex) is a global market where currencies from all around the world are traded for another currency. It includes all aspects of buying, selling and exchanging currencies at current or determined prices. The volatility of this market fluctuates the exchange rate continuously. It also refers to the global market where currencies are traded virtually over-the-counter (OTC).
If you have ever traveled to another country, you have made a forex transaction. For example, if you are an american that’s taking a trip to Japan, you would have to find a currency exchange booth at the airport to exchange your american dollar (USD) to japanese yen (JPY). The exchange between the two currencies, based on supply and demand, determines how many japanese yen you get for your american dollar.
Forex is a decentralized market that is open 24 hours a day, 5 days a week, exchanging over $5 trillion daily, making it the largest, most liquid financial market in the world. In comparison to less liquid markets such as the New York Stock exchange that exchanges over $20 billion per day, the forex market is over 200 times bigger.