The foreign exchange markets are located worldwide. Currency trading is a global activity. Every country in the world spends money and needs to change their money into other currencies to trade or interact with other nations.
Exchange happens at all levels of society. As an individual you have changed money when you travel for business or vacation. Or maybe you have sold something on eBay to someone in another country. Their payment comes in to your account in its own currency, and the bank or payment processor such as PayPal changes it for you. This is currency exchange at the root level.
Exchange or Forex trading has a different purpose, however. When you act on the foreign exchange markets, you do not purchase a different currency because you need it. You are now in the hope that it will rise in value, so you can return and finish with more money than you started with.
Of course it is risky. Price movement could go against you and you’d end up with less money instead of more. So you will want to gather plenty of information about currency trading before you actually begin trading.
Forex trading began in the 1970s when the major currencies were liberalized so that their values were no longer fixed. The banks and large investors quickly saw the potential for profit from changing prices.
The main Forex markets are the major financial centers worldwide. London sees the highest activity with New York second and third Tokyo. Other major players are Sydney, Zurich and Frankfurt.
Originally you had to be in one of these major centers to trade money, or at least have a telephone connection with a broker who was there. It was very difficult for someone who was not on site to act quickly enough to react to sudden fluctuations in price that can happen in the Forex markets.
But modern technological advances have changed all that. Since the advent of Internet it has been possible to act on your own account from anywhere. This means that it has become easier and easier for the little man to trade in the foreign exchange markets.
While some people never think of foreign currency from one instance of travel to the next, others are studying charts and financial information or even use automated software in the form of Forex robots that make money on the rising and falling prices. They do this in order to become financially free through trading in foreign exchange markets.