If you have seen ads on TV, on the internet or in magazines for forex trading, you may be wondering what is forex. The word forex is short for foreign exchange, which is the exchange of one currency for another on the world's money markets. It is sometimes shortened even further to FX.

Many people already have some experience of exchanging currencies when they are going to another country for business or on vacation. You probably realize as well that the banks are constantly changing money for businesses who import or export goods from foreign countries. However, an estimated 70%-90% of currency transactions are speculative. This means that the person or institution making the exchange has no intention of taking delivery of the currency that they have ordered, but plans to trade it back at a profit. This is forex or currency trading.