Forex trading is the process of exchanging one currency for another through the financial markets. With a daily volume exceeding $6.6 trillion, it is the largest and most liquid financial market in the world.

This massive market operates 24 hours a day, five days a week, providing traders with opportunities around the clock. Unlike traditional stock markets, forex trading doesn`t take place on a centralized exchange, but rather through a global network of banks, financial institutions, and individual traders.

Unlike stocks which trade on centralized exchanges, the forex market is decentralized and operates 24 hours a day through a global network of banks, institutions, and traders. This decentralized nature creates a more dynamic and fluid trading environment.

The interbank market forms the core of forex trading, where large banks trade directly with each other or through electronic networks. This core market sets the basis for all retail forex trading, though retail traders access the market through forex brokers.

Currencies are always traded in pairs. When you trade forex, you are simultaneously buying one currency while selling another. This concept is fundamental to understanding how forex trading works.

Each currency pair represents a price quote of how much one currency is worth in terms of the other. For example, if the EUR/USD price is 1.2000, it means that one euro can buy 1.20 U.S. dollars.

The forex market consists of various participants, each playing a crucial role in maintaining market liquidity and efficiency. Understanding these participants helps traders grasp market dynamics better.

The forex market operates in multiple sessions across different time zones. Understanding these sessions is crucial for traders as market activity and volatility vary throughout the day.

The most active trading periods often occur when sessions overlap, particularly during the London-New York overlap. These periods typically offer the highest liquidity and potentially the best trading opportunities.

The forex market has several unique characteristics that set it apart from other financial markets. Its high liquidity means trades can be executed quickly and with minimal price impact. The availability of leverage allows traders to control larger positions with a smaller capital outlay, though this also increases risk.

Market volatility varies throughout the day and can be influenced by economic data releases, political events, and changes in market sentiment. Successful traders learn to adapt their strategies to these changing market conditions.