The foreign exchange market is where currencies are bought and sold against each other. It's the largest and most liquid financial market in the world, and the market every broker on this site is built around.
Forex (FX) is a decentralized, over-the-counter market for exchanging one currency for another; there's no single central exchange the way there is for stocks. Instead, trading happens through a global network of banks, brokers, and other participants. The Bank for International Settlements' Triennial Survey has put daily global FX turnover at well over $7 trillion, making it larger by a wide margin than global equity markets combined.
Exchange rates are driven primarily by interest rate differentials and central bank policy: currencies tend to strengthen when their central bank is raising rates relative to others, since that attracts yield-seeking capital. Beyond that, economic data (inflation, employment, GDP growth) and trade flows move prices too, along with shifts in broader risk sentiment (whether markets are favoring safer or riskier assets), often quickly around scheduled data releases and central bank announcements.
Institutions and some large traders deal in the spot and forwards market directly. Most retail traders access forex through CFDs (contracts for difference) offered by brokers like the ones reviewed on this site. You're trading on the price movement of a currency pair using margin, without taking delivery of the underlying currency. This is different from spot FX settlement or exchange-traded currency futures, and it's why the broker's execution quality, spread, and regulatory status matter so much: you're trading against or through the broker's pricing, not on a public exchange.
Forex trades close to 24 hours a day on weekdays, rolling through the Sydney, Tokyo, London, and New York sessions as each opens and closes. Liquidity and spreads are typically best during session overlaps, especially London/New York, and noticeably thinner during the Asian session or around low-liquidity periods like major holidays, when spreads on even major pairs can widen.
Retail forex/CFD trading is leveraged by nature, so both gains and losses are magnified: a small adverse move can represent a large percentage move against your margin. Volatility spikes around scheduled news events and central bank decisions, and regulatory leverage caps (covered in our regulation guide) exist specifically because retail losses on leveraged FX products are common. Confirm a broker's regulatory status and negative balance protection before trading with real capital.
Ranked by tightest headline EUR/USD spread on their standard account among our Top 12, the metric most directly relevant to active currency trading. Actual spreads vary by market conditions; see each broker's full review for raw/ECN account options.