Forex or Foreign Exchange trading is the exchange of currency. The daily transaction of the foreign exchange market is $2.5 trillion. In the foreign exchange market a trader trades one currency for another. Buying Euros with US dollars or selling pounds for euros can be a typical example of a foreign exchange transaction.
The profit in a currency exchange trade comes from the small fluctuations in the value of one currency against another. Leveraging is a strategy which is adopted by traders to maximize their gains in a currency trade. A trader can trade $100, 000 by making an investment of $1000. However, foreign exchange trading is a risky business and traders can lose their entire investments if they are not careful with choosing the right currency pairs at the right price. It's usually advised to read stock market reviews before entering the market.
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