Trading forex means making transactions that involve currencies in the foreign exchange market. This could mean buying a certain currency pair, such as EUR/USD, based on the expectation the euro will appreciate relative to the U.S. dollar. Alternatively, an investor could sell the same pair, based on the belief the common currency will depreciate against the U.S. dollar.
In addition to making basic purchase and sale transactions, traders have many ways to take positions on currency pairs, including spot contracts, forwards, derivatives and contracts for difference.