What exactly is Forex and how does it work?

Forex is an abbreviation for "foreign exchange" and refers to financial markets with global trading between various currencies. It's a common way of investing in the global marketplace, and as such, traders may choose to take long or short positions for different pairings.

Structurally, forex trades are executed almost entirely electronically on platforms run by retail brokerage firms who charge commissions in various structures.

The trade settlements usually happen through mutual funds or other time deposit accounts at banks worldwide that act as passive correspondents to brokerages in their countries.