Abbr. "FOREX" stands for Foreign Exchange, an exchange of currencies. When a person comes to trade currencies, e.g. buy one currency and sell another one - it is called currency exchange trading, or simply known as Forex.
Because the value of each currency always on the move, it fluctuates depending on the local and global economic factors, there is always an opportunity to profit on those changes/fluctuations - it is called currency speculation.
Euro, US dollar, Swiss Frank, British Pound and Japanese Yen - these are the most traded currencies in Forex. Of course, trading is not limited to those currencies, Forex offers variety of currencies one can trade.
If to describe in simple words how individuals trade Forex it would look next way:
Forex trading in its prevailing volume is done online.
A person finds a Forex broker, opens a trading account with the broker and deposits money.
Forex broker provides to trader so called Forex trading platform - an application, a working environment, where trader buys and sells currencies, dealing online - in other words he speculates to make money on the difference of currency rates.
In Forex currencies are traded in pairs.
EUR/USD, GBP/USD, AUD/JPY, USD/CHF and so on.
The first currency in the exchange pair is referred to as the base currency and the second as the quote currency.
For example, EUR/USD exchange rate = 1.400
Here the price of the Euro is expressed in US dollars: 1 euro = 1.400 dollars
The exchange rate tells to trader how much of the quote currency should be paid to obtain one unit of the base currency.
http://forexbeginners.net/whatisforex
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