The word "forex" is a contraction of the words "foreign exchange"; it is sometimes abbreviated further, and simply called "FX". Forex provides opportunities for speculation, and that is likely what stimulated your curiosity.
Forex is simply the trading of currencies. In its broadest sense, forex includes all commercial and speculative buying and selling of all the world's currencies, making it the largest market in the world. In a forex trade, one currency is purchased while another currency is simultaneously sold; in other words, one currency is exchanged for the one being bought. The term forex properly refers to all currency trading done anywhere in the world; however, in practice, and in the context of this website, the word is often used to refer specifically to the trading of currencies by speculators.
Astoundingly, the forex market has tripled in size from $1.1 trillion traded per day to $3.2 trillion per day in just over 10 years, and it has only been widely operating for about 20 years, according to the most recent Triennial Survey of the Bank for International Settlements. By comparison, all of the stock exchange activity worldwide is about $2.8 billion per day or about 10 times smaller.
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Forex speculation involves risk, and inherent in risk is potential profit; the more at risk, the more potential profit.
The forex market is huge: truly a global marketplace, operating all the time, with just a brief cooling off period on weekends. Due to this size and global scope, prices can be observed and traded, but not easily manipulated.
Forex rates can be affected by events in your backyard or anywhere in the world. When such events affect the value of a currency, the currency value can often tend to trend in a particular direction for a period of time. Analysis of historical forex market action in light of current market conditions (known as technical analysis), possibly combined with consideration of global events and markets (fundamental analysis) can help the forex speculator gain insight into currency markets that might allow the trader to project future price movements. However, such insight and potential success in forex speculation requires experience, commitment, discipline and a perhaps a special type of intelligence, and will come only at an investment in time, experience and financial loss. forex trading is not for everyone, but it can afford an opportunity for excitement and profit for the right person.