The Foreign Exchange (FOREX) is the largest financial market in the world, with trillions of dollars traded each and every day. Initially utilized just by large banks, multinational corporations and extremely wealthy currency speculators, the influx of online brokerages tailored to the retail market has created a vibrant retail foreign exchange market. Now, with a relatively small initial investment, anyone can take advantage of the online Forex market.

While banks and large multinational corporations generally execute foreign exchange transactions simply as a function of doing international business or to hedge their base currency to protect against devaluation, currency speculators exploit fluctuations in the forex market exclusively for profit. While trading currencies is a bit riskier than trading other instruments, like stocks and commodities, the potential for profit is unparalleled.

The most important forex activity is the spot business between the dollar and the four major currencies (British Pound, Eurodollar, Swiss Franc, and Japanese Yen). These different currencies are expressed as pairs. When these pairs are traded, one of the currencies is bought and the other currency is sold concurrently.

Today, anyone with an internet connection can trade these pairs under the same conditions once reserved for high value individuals and corporations. Most retail brokerages offer real time currency prices, instant execution, advanced charting features and extensive real time news and analysis feeds.

Trading foreign exchange carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade forex you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading.