Foreign exchange – or forex – involves the purchase of one currency with the simultaneous sale of another.
Forex trading is now the largest and most liquid financial market in the world. The vast majority of this volume comprises speculators' attempts to anticipate market movements, predicting whether one currency will either rise or fall in value against another currency.
Forex pairs
Forex prices are quoted in pairs, as each trade involves the purchase of one currency with the sale of another. Major forex pairs include the euro against the US dollar (EUR/USD), the pound against the US dollar (GBP/USD), the euro against the pound (EUR/GBP) and the US dollar against the Japanese yen (USD/JPY).
The first-named currency in the pair is known as the 'notional' currency. The second-named currency is the 'base' currency. A EUR/USD price of 1.4837 means that EUR1 equates to USD1.4837.
Forex spread betting
PureDeal, our browser-based dealing platform, gives you an easy way to back your judgement on forex market movements. For all our forex bets, you simply 'buy' if you think the first-named currency in the quoted pair is going to strengthen against the second-named currency, and you 'sell' if you think the first-named currency is going to weaken against the second-named currency.
For more details on placing forex bets please see our examples.
Expanding your forex knowledge
While our platform gives you an easy way to back your judgement in the forex markets, making that judgement is another matter entirely. Almost anything can affect a forex market, from economic data to political stability. To find out more about what influences one currency against another, see our twice-daily Forex Focus. Each update includes performance charts with accompanying analyses of topical currency pairs. We also offer a free online forex seminar, which discusses the key areas of the foreign exchange markets.
Getting started
Our TradeSense education course is a free, six-week guide to spread betting. The programme allows you to place bets starting at just 10p a point, so you can increase your forex bet size as you increase your proficiency.