Forex Trading Frequently Asked Questions (2026)

Forex trading is the buying and selling of currency pairs on the global foreign exchange market — the largest and most liquid financial market in the world, with over $7.5 trillion in daily volume. Traders speculate on whether one currency will rise or fall in value relative to another, such as the Euro versus the US Dollar (EUR/USD).

Unlike stock markets, forex has no central exchange. All transactions occur electronically over-the-counter (OTC) between banks, institutions, and retail traders via brokers. The market operates 24 hours a day, five days a week, spanning major financial centers across London, New York, Tokyo, and Sydney.

The forex market functions through a network of banks, financial institutions, and retail brokers that quote buy and sell prices for currency pairs. When you place a trade, your broker routes your order through this network, matching you with a counterparty at the agreed price. Prices fluctuate constantly based on supply and demand, driven by economic data releases, central bank policy decisions, geopolitical events, and trader sentiment.

Trading sessions overlap at certain hours — most notably the London-New York overlap from 8 AM to 12 PM EST — creating the highest liquidity and tightest spreads of the trading day. Understanding session timing is critical for choosing when to trade specific currency pairs.