What is the Forex Market?
The foreign exchange (forex or fx) market is the largest financial market in the world. It operates 24 hours, 5 days a week. This market acts as a platform for banks, corporations and individuals to change currencies of one country to currencies of another country.
Multinational corporations, businesses and individuals too do buy and sell currencies for their own use. For example, a business may want to buy foreign currency to settle payment for its imports from another country. Multinationals often transfer money from one country to another country. Every year, ACCA students from around the world buy GBP as payment for membership fee and examination fee.
However, a large part of the forex market is made up of speculators. These participants are known as currency traders and they speculate on the movement of the currencies with the hope to profit from it. For example, if your local currency is GBP and you anticipate GBP will weaken against USD, you would buy USD and sell GBP. When USD appreciates, you can then convert your USD back to GBP and profit from the difference in the exchange rate.
Individual currency traders can take advantage of the 24 hours market by working during the day and trade currencies during the evening.