When an investor closes the trade, the broker debits or credits the account with the loss or gain. Orders can be placed online, wherein the broker passes it along to a partner to fill the position. Like the broader stock market, forex trades are placed through a broker or market maker. If the pound rises in value, the purchasing power to buy U.S. dollars and buy British pounds (a currency pair). dollar is expected to weaken in value to the British pound, a forex trader will sell U.S. The goal of a forex trader is to profit from these changes in value by speculating on which way the forex price is most likely to turn. For many reasons, including geopolitical factors and economic factors, currency values rise (appreciate) and fall (depreciate) relative to each other. Foreign exchange, or forex, is exchanging one currency for another at an agreed-upon price.įorex is a currency market where individual investors, banks, governments, and traders speculate on the price of one global currency against another. If you’ve ever travelled and needed to exchange your money into a foreign currency, explains that you have, in effect, participated in the foreign exchange market.

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