Operating 24 hours a day for 5 days a week, the foreign exchange market is the largest and most liquid market globally, with daily volumes exceeding $4 trillion, outstripping any exchange-based market.
Foreign exchange trading entails trading one currency pair against another, forecasting the rise or fall of one currency against the other. Currencies are traded in pairs, such as the Euro versus the US Dollar (EUR/USD).
Forex Spreads
How does Forex Trading work?
Forex Trading Examples
Opening Price
€200,000 x 1.33623 = USD $267,246
Closing Price
€200,000 x 1.32129 = USD $264,258
Gross Profit on Trade
$2988
Opening the Position
The price of the Euro against the US Dollar (EUR/USD) is 1.33623/1.33624 and you decide to sell 2 standard lots (the equivalent of €200,000) at 1.33623.
Closing the Position
One week later the Euro has fallen against the US Dollar to 1.32128/1.32129 and you decide to take your profit by buying back 2 standard lots at 1.32129