what is foreign exchange 
foreign exchange otherwise known as forex or fx refers to the exchange or purchase of one currency for another rates of exchange are constantly fluctuating sometimes greatly other times only slightly exchange rates are always presented in pairs known as currency pairs the first currency in the pair is known as the base currency and is always equal to 1 the second currency is the quote currency and is the equivalent of one unit of the base currency for example if the eur usd is trading at 1 1150 that means that one euro is the equivalent of 1 1150 u s dollars if the rate of exchange goes up that indicates that the euro has grown stronger against the dollar because one euro will be able to buy more dollars than previously if the rate drops then the u s dollar has grown stronger against the euro three types of currency pairs are traded on forex markets majors pair the u s dollar with each of the six major currencies the euro japanese yen british pound swiss franc canadian dollar australian dollar and new zealand dollar minors cross currencies pair the euro japanese yen or british pound with other majors except the u s dollar minors cross currencies pair the euro japanese yen or british pound with other majors except the u s dollar exotics pair one of the seven majors with a currency not on that list generally with a lower trading volume 