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What forex trading is

Forex Foundations

Currency against currency

Forex is the global market for trading one currency against another, EUR against USD, GBP against JPY, and so on. It's the largest, most liquid financial market in the world, trading nearly 24 hours a day across global sessions.

A bet on relative strength

Because currencies always trade in pairs, a forex position is really a bet on relative strength. EUR/USD rising means the euro is strengthening against the dollar, not that the euro is rising in some absolute sense.

A decentralized, near-24-hour market

Unlike a stock exchange with one central location, forex trades over a decentralized network of banks and brokers across the globe, which is exactly why it can run almost continuously from Sunday evening to Friday evening.

Check yourself

Forex trading fundamentally means…

  1. Trading one currency's value against another currency correct
  2. Trading shares of individual companies
  3. Trading physical commodities like oil or gold only

Every forex trade is a bet on one currency's value relative to another, never an absolute price.

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