What is foreign exchange trading?

Forex trading is the exchange of one country's currency with another country's currency. Unlike other financial markets, the foreign exchange market has no specific location and no central exchange. Instead, transactions are conducted through electronic networks among banks, businesses, and individuals. "Forex trading" is the simultaneous purchase of one currency in a pair of currencies and the sale of the other currency. Forex is traded in currency pairs, such as Euro/U.S. Dollar (EUR/USD) or U.S. Dollar/Japanese Yen (USD/JPY).

Extended information:

From the perspective of the nature of the transaction and the type of implementation, foreign exchange trading can be divided into the following two categories:

1. To satisfy customers Basic foreign exchange transactions for real trade and capital transaction needs;

2. On top of basic foreign exchange transactions, foreign exchange derivatives transactions are conducted to avoid and prevent exchange rate risks or for foreign exchange investment and speculation needs.

Basic foreign exchange transactions belonging to the first category are mainly spot foreign exchange transactions, while foreign exchange derivative transactions include forward foreign exchange transactions, as well as foreign exchange optional transactions, swap transactions, swap transactions, etc.