Home » Currency Trading

Currency Trading

« Back to Glossary Index

Currency trading, forex trading, or foreign exchange trading is the buying and selling of currencies on the forex market with the aim of making a profit.

It is one of the most actively traded markets in the world, with individuals, corporations, and banks contributing to a daily average trading volume of more than $5 trillion.

Unlike shares or commodities, currency trading does not take place on exchanges but directly between two parties, in an over-the-counter (OTC) market.

The forex market is run by a global network of banks, spread across four major forex trading centers in different time zones: London, New York, Sydney, and Tokyo.

Currency trading works like any other exchange where you are buying one asset using a currency. In the case of forex, the market price tells a trader how much of one currency is required to purchase another.

For example, the EUR/USD currency exchange rate shows how many US dollars buy one euro.

There are two popular ways to trade the currency markets. Either with derivative products or through a forex broker.

The most popular forex derivatives are spread bets and CFDs.

Ways to TradeProductDescription
Forex Derivatives ProviderSpread BetA forex spread bet enables you to speculate on the future price direction of a currency pair. Your profit or loss is dictated by how far the market moves in your favor before you close your position and how much money you have put an upper point of movement.
Forex Derivatives ProviderCFDA forex CFD is an agreement to exchange the difference in the price of a forex pair from when you open your position to when you close it. If the market price moves in your chosen direction, you would profit, and if it moves against you, you would make a loss.
Forex BrokerCurrenciesA forex broker is a firm that buys and sells currencies on behalf of retail traders, usually via a forex trading platform. Like stockbrokers, they charge a fee though usually in the form of a spread instead of commission – in order to execute orders placed by their clients. However, a key difference is that forex brokers will place trades over-the-counter instead of on an exchange.

Traditionally, a lot of currency trades have been made via a forex broker, but with the rise of online trading, you can take advantage of currency price movements using derivatives like spread betting or CFD trading.


Parabolic describes a market that moves a great distance in a very short period of time, frequently moving in an accelerating Read more

Bitcoin Block

Blocks are data structures within the blockchain database, where transaction data in a cryptocurrency blockchain are permanently recorded. A block records Read more

Monetary Policy

Monetary policy refers to the actions taken by a nation’s central bank to influence the availability and cost of money and credit to Read more

XM Bonus