Forex trading involves the trading of currencies. Traders gain not from the value of their currency but rather based on the exchange value of other currencies. This is also the very reason why forex trading always involves a combination of currencies, for example, dollars with reference to euros and euros with reference to other currencies, so forth and so on.
Traders of forex constantly buy and sell pairs of currencies. They do this hoping to make profits out from any favorable exchange rate fluctuations that may occur. Predicting accurately the direction of fluctuations between currencies is an ability that forex traders need to hone, that is of course if they want to increase their chances of gaining profits. Fluctuations in currencies are very frequent and most often very rapid. These fluctuations are caused by various changes that happen in the world such as increase and decrease in oil prices, changes in economic climates and interest rates plus of course the effect of significant world events.