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What Is Forex Trading? | XYZ Trading
Education — Forex

What is trading on the foreign exchange market?

The foreign exchange market is the largest financial market in the world. Yet it remains poorly understood by many. Here’s what you need to know before you get started.

The Market
$7 000 Mds

traded every day

How does the foreign exchange market work?

Forex is simply the buying and selling of currencies. When you exchange euros for dollars, you’re already participating — at your own scale — in the foreign exchange market. For a trader, the goal is to profit from fluctuations in value between two currencies.

The Market Forex est décentralisé — il n’existe pas de bourse centrale comme pour les actions. Les transactions se font directement entre participants : banques, institutions financières, entreprises multinationales, et traders particuliers, via des plateformes de trading en ligne.

Trading Hours

A market open around the clock.

The Market est ouvert cinq jours sur sept, 24 heures sur 24, en suivant les fuseaux horaires des grandes places financières mondiales. Il n’y a pas de cloche d’ouverture ni de fermeture. Les périodes de chevauchement entre sessions — notamment entre Londres et New York — sont généralement les plus actives et les plus liquides.

Session
Asian
00h00 – 09h00
Session
European
08h00 – 17h00
Session
US
14h00 – 23h00
Currency Pairs

Currency pairs — the foundation of Forex.

On the foreign exchange market, you never trade a single currency. You always trade a pair — one currency against another. For example, EUR/USD represents the euro against the US dollar.

Major pairs all involve the US dollar. They are characterised by high liquidity and tight spreads — making them the go-to choice for both beginner and experienced traders.

EUR/USDEuro / US Dollar
GBP/USDLivre sterling / US Dollar
USD/JPYUS Dollar / Japanese Yen
USD/CHFUS Dollar / Swiss Franc
AUD/USDAustralian Dollar / American Dollar
Minor pairs (EUR/GBP, EUR/JPY) and exotic pairs (USD/TRY, EUR/ZAR) offer interesting opportunities but come with higher volatility and wider spreads.
Mechanics

How do you make money on Forex?

The principle is simple: buy a currency when you think it will rise, sell it when you think it will fall. The difference between your entry price and exit price is your profit — or your loss.

The spread

The difference between the buy price (ask) and the sell price (bid). This is the broker’s primary source of income. The tighter the spread, the less your trade costs to enter.

Leverage

With leverage of 1:30, a deposit of €1,000 allows you to control a position of €30,000. A powerful tool — but a double-edged one. It amplifies gains just as much as losses. Rigorous risk management is essential.

Participants

Who trades the foreign exchange market?

Forex is not reserved for large institutions. Today, anyone with an internet connection and an account with a regulated broker can access it.

Central banksIntervene to stabilise their national currency.
Commercial banksAccount for the largest share of daily volume.
MultinationalsHedge their exposure to currency risk.
Hedge fundsSeek to generate returns through complex strategies.
Retail tradersA growing share of the market, driven by access to online platforms.

Forex offers real opportunities.
But you need to prepare properly first.

Getting educated before trading with real money isn’t optional — it’s essential. A demo account remains the best starting point for learning the market without risking your capital.

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