Foreign exchange market (Forex)
Forex is the market in which one currency is exchanged for another. Quotes are expressed in pairs and reflect how much the base currency is worth in terms of the quote currency.
How it works at a general level
Trading is organized around currency pairs. A change in the quote indicates that the value relationship between the two currencies has changed; liquidity and volatility may vary by session and economic context.
Examples of instruments or segments
Major pairs, made up of currencies from widely traded economies.
Cross pairs, which do not necessarily include the U.S. dollar.
Emerging-market pairs, which may present different liquidity dynamics.
General characteristics
- Relative quotation between two currencies.
- Activity distributed across different financial centers and sessions.
- Sensitivity to macroeconomic news and monetary policy decisions.
Factors that commonly influence
- Interest rates and central bank policy.
- Inflation, employment, and economic growth.
- Trade flows, political events, and risk perception.
General risks
- Rapid moves in response to news or low liquidity.
- Risk associated with both currencies in the pair.
- Leverage, when used, magnifies both losses and gains.
Important: This information is educational and general. It does not constitute financial advice or an investment recommendation. The examples describe types of instruments or segments and do not confirm their availability at TRD Station.