The Foreign Exchange Market, Forex for short, FX, or just currency market, is a global market for the buying, selling and trading of currencies against one another, for instance the US Dollar (USD) against the UK Pound (GBP).
Forex is the largest market in the world with around $5 trillion exchanged every day. The Forex market is decentralized, which means that no single government, organisation or institution controls the operation of the market or the prices of the currencies.
The rise of the internet has opened the Forex market to consumers with live trading via websites using relatively small amounts of capital combined with margin trading and CFD's (contracts for difference). There are a lot of companies set up to facilitate Forex trading with most being regulated in some way, but also many that are not.
Trading Forex appears to be a relatively easy way to make a profit from the global currency market, and many companies offer a low barrier to entry with small minimum deposits, sophisticated trading software PC applications, web based and mobile apps. The use of margin, or leverage, which allows position sizes of 10x, 50x, 100x or more, makes it look like large profits can be made quickly. But Forex trading is a highly complex and skilled undertaking, and the use of margin to leverage trade size can result in very rapid liquidation of positions in which all the money put up as margin is lost. Many of the adverts for online Forex trading companies carry warnings from regulators that state that 70%-80% (or more) of retail investors lose money using Forex trading platforms. Caution is advised!