The forex market is where one currency is traded for another. It is one of the largest markets in the world. Some of the participants in this market are simply seeking to exchange a foreign currency for their own, like multinational corporations which must pay wages and other expenses in different nations than they sell products in. However, a large part of the market is made up of currency traders, who speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Currency traders try to take advantage of even small fluctuations in exchange rates.
forex markets are quite unique in the financial world in that exchange rates are highly sensitive to a great variety of factors. Many different types of investors have access to the market, the market is ever changing, and currencies are traded around the clock. The main international banks continually provide the market with both bid (buy) and ask (sell) offers.
There are forex trading centres located in Hong Kong, Singapore, Paris and Frankfurt amongst others, while the biggest three are New York, Tokyo and London, of which London is the largest. The forex market is open 24 hours per day throughout the week (closing worldwide Friday afternoon at 2100 GMT, and reopening Sunday 1900 GMT when Wellington, New Zealand opens on their Monday morning). If the European Market is closed, the Asian or US market will be open on the other hand and so all world currencies can be continually in trade. Traders can react to news when it breaks, rather than waiting for the market to open, as is the case with most other markets.