What is Forex?
Forex (Foreign Exchange) is the global decentralized market for trading currencies. It is the largest and most liquid financial market in the world, with an average daily trading volume exceeding $5 trillion — far surpassing all stock markets combined.
Unlike stock exchanges, the Forex market has no central physical location. Trading takes place electronically over-the-counter (OTC), connecting participants across the globe through a network of banks, brokers, and electronic trading systems.
Key Facts About the Forex Market
Main Participants
- Central banks — manage national currency reserves and intervene to stabilize exchange rates
- Commercial banks — the largest volume participants, conducting trades for clients and proprietary trading
- Corporations — exchange currency for international trade and hedging
- Hedge funds & investment firms — speculative trading for profit
- Retail traders — individual investors trading through brokers like Alfa-Forex
Currency Pairs
Currencies are traded in pairs. The first currency is the base currency and the second is the quote currency. The price shows how much quote currency is needed to buy one unit of the base currency.
| Pair | Name | Category |
|---|---|---|
| EUR/USD | Euro / US Dollar | Major |
| GBP/USD | British Pound / US Dollar | Major |
| USD/JPY | US Dollar / Japanese Yen | Major |
| USD/CHF | US Dollar / Swiss Franc | Major |
| AUD/USD | Australian Dollar / US Dollar | Major |
| EUR/GBP | Euro / British Pound | Cross |
Trading Hours
The Forex market operates 24 hours a day, five days a week, across four major trading sessions:
- Sydney session — opens Sunday evening (UTC)
- Tokyo session — Asian market hours
- London session — most liquid session, accounting for ~35% of volume
- New York session — overlaps with London for the most active trading period
Long and Short Positions
In Forex, you can profit from both rising and falling prices:
- Long (Buy) — you buy a currency pair expecting the base currency to rise in value
- Short (Sell) — you sell a currency pair expecting the base currency to fall in value