💡 What is Forex?

Forex (short for Foreign Exchange) is the global marketplace where people and institutions exchange one currency for another.

📌 Example:
If you travel from Ethiopia to the USA, you’ll exchange Birr (ETB) for US Dollars (USD). That’s forex in action on a personal level.

But on a global scale, traders, banks, and institutions trade trillions of dollars daily in the forex market to profit from currency value changes.

🔁 Forex = Buying one currency while selling another at the same time.

🔄 How Does the Forex Market Work?

The forex market works in pairs – like EUR/USD or USD/JPY. When you trade a pair, you’re buying one currency and selling the other.

📌 Example:
If you believe the Euro will rise against the US Dollar, you buy the EUR/USD pair.
If the Euro does rise, you profit when you close the trade.

📈 The market is influenced by:

• Economic news (like inflation or interest rates)

• Political events (elections, war, etc.)

• Supply and demand

• Central bank decisions

     

  👥 Who Trades Forex?

  

  The forex market is massive, and traders come from different backgrounds:

  1. Retail Traders

  People like you and me trading via brokers using platforms like MetaTrader or TradingView.

  📌 Example: A student in Nairobi trading USD/JPY on their laptop after school.

  2. Banks

  Big players like the Central Bank of Ethiopia, Chase Bank, or Standard Chartered trade for profit or monetary policy.

  3. Institutions

  • Hedge funds

  • Corporations

  • Governments
    Trade forex to hedge risk, protect investments, or move large funds globally.

  ✅ Summary:

  Term	Meaning
  Forex	Global currency market
  Currency Pair	EUR/USD, USD/JPY, etc.
  Buy/Sell	Predicting if one currency will rise or fall against another
  Major Players	Retail, banks, institutions