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The Foreign Exchange market, also referred to as the "Forex" or "FX" market, is the largest financial market in the world with a daily average turnover of US$1.9 trillion -- 30 times larger than the combined volume of all U.S. equity markets.
Foreign Exchange is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).
There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit or speculation.
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