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What Is the Foreign Exchange Market? Definition & Instruments of Trading

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What Is the Foreign Exchange (Forex) Market?

In the foreign exchange market, commonly referred to as “forex,” one currency can be traded for another currency. Just like with any market, trading can be volatile since many currencies are freely traded, and foreign exchange rates are influenced by supply and demand. But trading one currency must involve another, and currencies are always traded in pairs on the foreign exchange market.