Forex (also known as FX) is the short form of foreign exchange, which quite simply refers to the conversion of one currency into another. Forex is the largest financial market in the world – and one of the most volatile.
Forex, or foreign exchange, is the means by which individuals, companies and central banks convert one currency into another. While a lot of foreign exchange is done for practical purposes, the vast majority of currency conversion is undertaken with the aim of earning a profit.
The amount of currency converted everyday – over $5 trillion dollars – makes forex trading the biggest financial market in the world and can make price movements of some currencies extremely volatile. That volatility is part of why forex is so attractive to some traders: bringing about greater chance of high profits, while also increasing the risk.