While the value of a country's currency remains stable within its own borders, in the same time its value can widely fluctuate compared to that of other countries.
Exchanging rates keep on changing constantly and supply and demand for any given currency, and thus its value, are influenced by economic factors, political conditions and market psychology.
Betting on the spreads between countries' currencies by placing "buy" or "sell" orders is what Forex trading is all about.Although, the value of the daily turnover in the forex markets substantially exceeds those of other markets, this is not the domain of the big players only. Small investors can also participate
Trading is conducted through an "over-the-counter" network of traders from major commercial and investment banks linked by computer terminals.
Participants include importers and exporters, as well as traders, portfolio managers and foreign exchange brokers.
Major trading centers include London, New York and Tokyo, with total trading volume in excess of $2 trillion dollars of foreign currency per day.
More than half of all trading directly involves the exchange of U.S. dollars and other currencies are traded against U.S. dollars since currency dealers quote other currencies against the dollar when trading among themselves.