when trading in the forex market you re buying or selling the currency of a particular country relative to another currency but there s no physical exchange of money from one party to another as at a foreign exchange kiosk 
in the world of electronic markets traders usually take a position in a specific currency with the hope that there will be some upward movement and strength in the currency they re buying or weakness if they re selling so that they can make a profit a currency is always traded relative to another currency if you sell a currency you are buying another and if you buy a currency you are selling another the profit is made on the difference between your transaction prices a spot market deal is for immediate delivery which is defined as two business days for most currency pairs the major exception is the purchase or sale of usd cad which is settled in one business day the business day excludes saturdays sundays and legal holidays in either currency of the traded pair during the christmas and easter seasons some spot trades can take as long as six days to settle funds are exchanged on the settlement date not the transaction date the u s dollar is the most actively traded currency the euro is the most actively traded counter currency followed by the japanese yen british pound and chinese renminbi 4market moves are driven by a combination of speculation economic strength and growth and interest rate differentials retail traders don t typically want to take delivery of the currencies they buy they are only interested in profiting from the difference between their transaction prices because of this most retail brokers will automatically roll over their currency positions at 5 p m est each day the broker basically resets the positions and provides either a credit or debit for the interest rate differential between the two currencies in the pairs being held the trade carries on and the trader doesn t need to deliver or settle the transaction 