All lessons
What is the forex market?
An airport counter and a trading platform both exchange currencies. The purpose and the costs can be very different.
Identify what a currency pair represents and who stands on the other side of a trade.
Forex is the market for exchanging currencies. A pair compares two currencies rather than measuring one in isolation. EUR/USD states how many US dollars buy one euro. Buying this pair creates exposure to euro strength relative to the dollar.
Banks, companies, funds, public institutions and individuals exchange currencies for different reasons. Much foreign exchange activity occurs over the counter through networks of dealers. There is no single order book containing every worldwide forex transaction.
A retail product may be a leveraged rolling contract or CFD rather than delivery of physical currency. Exchange-traded currency futures are different contracts. Read the product agreement to identify the counterparty, settlement method and protections instead of assuming every forex platform operates identically.
Let’s use numbers · hypothetical example
EUR/USD moves from 1.1000 to 1.1200. One euro now buys two cents more. That describes a relative change, not proof that every European asset increased.
Keep in mind
Broker quotes and contract terms can differ. A familiar platform name does not establish the dealer's regulatory status.
Your turn
Find a sample product description and record its pair, counterparty, settlement method and trading venue.
A quick check before we move on
Does one global order book contain every forex trade?
- Yes; every trade goes through one exchange
- Yes; every retail broker shows the full market
- No; much trading is distributed across OTC dealers
Check answer
No; much trading is distributed across OTC dealers OTC foreign exchange is distributed. A broker or venue displays only the prices and liquidity available through its arrangement.
Sources and further reading
Content reviewed: 29 October 2026
Educational material with hypothetical examples. Trading can cause substantial losses. A course, pattern, stop order or past result cannot guarantee a profit or limit every loss. Practise in simulation and check current rules and product terms in your jurisdiction.
