The forex market has no single building or central exchange. It is a global network where banks, brokers, companies and traders buy and sell currencies with each other, mostly through computers.
Think of the currency exchange counter at an airport. Forex is the same idea, but it is worldwide, online and open almost all day.
The market works like a chain. Big players trade among themselves, and smaller players connect through them.
- 1Central banks set interest rates and can step in to steady their currency.
- 2Large banks trade with each other in huge amounts. This is called the interbank market.
- 3Brokers give everyday traders access to the market.
- 4Traders like you buy and sell through a broker's platform.
Prices move with supply and demand. When more people want to buy a currency, its price goes up. When more want to sell it, the price goes down.
Every pair shows two prices. The bid is the price you get when you sell. The ask is the price you pay when you buy.
The gap between them is called the spread. Here it is 0.0002, or 2 pips. It is one of the costs of trading.
The market is open 24 hours a day from Monday to Friday. It moves from one financial center to the next as the day goes on.
- 1Sydney session
- 2Tokyo session
- 3London session
- 4New York session
- 1You open your broker's platform and pick a currency pair.
- 2You choose buy or sell and set your trade size.
- 3Your broker fills the order at the current price.
- 4The price moves, and your profit or loss changes with it.
- 5You close the trade and the result is added to your account.
- You are trading against the market, so prices can move fast.
- Spreads and fees are a real cost on every trade.
- Big news can move prices in seconds, so plan before it happens.
- So a smart trader remembers:
Q – 03 | What are currency pairs (major, minor and exotic)?
This page is for learning only and is not financial advice. Forex trading can lead to quick and big losses, and you can lose all the money you put in. Trade with real money only after you understand the risks.