Forex, also known as foreign exchange or FX, refers to the global decentralized market for trading currencies. It is the largest and most liquid financial market in the world, where participants, including banks, financial institutions, corporations, governments, and individual traders, exchange one currency for another at agreed-upon rates.
The foreign exchange market facilitates the conversion of currencies for various purposes, such as international trade, tourism, investment, speculation, and hedging. It operates 24 hours a day, five days a week, across different time zones, allowing continuous trading across major financial centers worldwide.
The primary participants in the forex market are commercial banks, which act as both dealers and intermediaries for their clients. However, with the advent of electronic trading platforms and increased accessibility, individual retail traders now have the opportunity to participate in forex trading as well.
Currencies in the forex market are traded in pairs, where one currency is bought and another is sold simultaneously. The exchange rate between the two currencies represents the value of one currency relative to the other. For example, in the currency pair EUR/USD, the euro is the base currency, and the U.S. dollar is the quote currency. If the exchange rate for this pair is 1.20, it means that one euro is equivalent to 1.20 U.S. dollars.
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