What is traded on the Foreign Exchange? | ForexGen

The simple answer is money
Forex trading is the simultaneous buying of one currency and the selling of another.

Currencies are traded through a broker or dealer, currencies are always traded in pairs

EX: the US dollar against Japanese yen, or the English pound against the Euro.

So if a broker or a dealer believes that the Euro will gain against the dollar, he will sell dollars and buy Euros.

Because you're not buying anything physical, this kind of trading can be confusing.

Think of buying a currency as buying a share in a particular country.

When you buy

say, Japanese Yen, you are in effect buying a share in the Japanese economy, as the price of the currency is a direct reflection of what the market thinks about the current and future health of the Japanese economy.