The forex market is the world’s most traded market, with an average turnover of more than US$5.3 trillion per day. Forex trading is essentially buying one currency while selling another. Currency values rise and fall against each other due to important factors such as economic stability and geopolitics. The goal of forex traders is to profit from these changes in the value of one currency against another by actively speculating on which way forex prices are likely to turn in the future.
The currency exchange rate is the rate at which one currency can be exchanged for another. It is always quoted in pairs like the EUR/USD (the Euro and the US Dollar). Exchange rates fluctuate based on economic factors like inflation, industrial production and geopolitical events. These factors will influence whether you buy or sell a currency pair.
Your primary task as a trader is to speculate the trend of the rate and buy an appreciating currency or sell a depreciating one, and then take your profits through execution of a reverse transaction.