In the vast world of finance, the foreign exchange market stands as a bustling epicenter, where currencies from around the globe change hands in a continuous dance of supply and demand. Often referred to as Forex or FX, this market is vital for international trade and investment, enabling businesses, governments, and individuals to exchange one currency for another. But how exactly does this intricate market work?

Understanding the Basics

At its core, the foreign exchange market is where currencies are traded. Just as goods and services have prices in local markets, currencies have values relative to each other. These values are in constant flux, influenced by a myriad of factors such as economic indicators, geopolitical events, interest rates, and market speculation.

Participants in the Market

The Forex market is unique due to its diverse range of participants. Let's meet the main players:

1. Banks and Financial Institutions: These are the largest participants, facilitating the...