Forex is a short form of “Foreign Exchange”. Clearly from the word we can imply that we are dealing with various currencies. Its a form of trading, we are doing trading for sure. However we are not dealing with the regular items, we are dealing with money. We are exhanging one country’s money with another country’s money. So after some time the value of money that we have may increase or decrease. If the money’s value appreciate, then we are making some profit. Otherwise we have to born the loss.
For illustration, let say we just bough one lot of GBP/USD at 1.9600. Due to strong economic environment, GBP is getting stronger and increase to 1.9700. At this level value of currency at hand increase by 0.0100 (we call it 100 pips in Forex, see pip for detail explanation). So if we want to make some money we can sell the GBP.
Before the world is connected through internet, only the big banks and financial institutions trade forex. If we want to make some investment in Forex, we have to go through the financial institutions. The process is slow and can be expensive. Luckily with the advancement of internet we are capable of conducting Forex trading right at the comfort of our home. There is no more dealing desk. Practically we can trade 24/7. Internet makes it possible for all of us to trade Forex from anywhere.