Forex is short for foreign exchange, the market on which currencies from different countries are traded. Currency exchanges matter because that is how all foreign trade is conducted. If you want to buy Italian leather, you (or in most cases, a retailer) have to convert your dollars into euros. To get a bottle of tequila in Mexico, you first have to buy pesos with your dollars. This constant need for exchange makes forex the world’s largest financial market—the average exchange volume is estimated at $2,000 billion a day.

Forex trading is the buying and selling of different currencies. You make a basic forex trade when you sell your dollars and buy euros. Since the value of a currency changes, a currency may be worth more or less at any given time. For example, five years ago you would have paid $600 for 500 euros. Today the same number of euros would be worth $650, so if you were to sell them, you would have made a $50 gain. Experienced forex traders make money by taking advantage of such discrepancies.

Unlike stock exchange markets, forex trades are not conducted in a central marketplace. Trades are done electronically through brokers, who work practically in every time zone. The market operates 24 hours a day for five and a half days of the week, so when a trading day ends in one place, it opens up somewhere else. Because it’s so active, price quotes on currencies can change several times over the day. It takes some foresight to know which currencies are worth investing in at any given time—it’s one of the essential skills you pick up as you learn forex trading.

Another concept worth learning is that of leverage, or the amount of money you can borrow from a broker to open a trade. In the stock market, you can borrow 50% to 80% of the amount you need, so you can buy more shares at a time. A forex broker will let you borrow up to 99% of the amount, usually without interest. Choosing your leverage—basically setting your risk levels—is another forex skill that calls for some thought.

If you’re new to forex trading, most brokers will offer you a demo account where you can try out their trading platform for about 30 days. Demo accounts use virtual money, so you can try out the different trading tools and practice trading in real time. It’s a great way to learn forex trading without putting your own money on the line, and prepare yourself for real trading down the road.