Foreign Exchange Market

Think: A supermarket of bartered-for groceries, only instead of trading three ketchup bottles for one Life cereal, you're trading so many yen for so many euro.

A FOREX market is just that: a place to trade international currencies. These currencies are valued against one another and can vary in relative strength based on all the normative factors. The foreign exchange market is “in the cloud,” so to speak, and doesn’t have a physical location. When one country buys something from another, the foreign exchange market uses current currency exchange rates to change one currency into another, so that the transaction can be completed.