Forex is all about the Foreign Exchange.  It is usually used when talking about the Foreign Exchange Market where people change money from one currency to another.

You would have probably changed money before if you have travelled overseas.  Of course, you can use your credit card and not have to worry too much about cash, but most people will change some money into the local currency at the airport or other foreign exchange place.  You will give a certain amount of cash to the cashier and they will give you back the new currency.  You will get back a different amount of money back.  The amount you receive back is decided by the currency market which compares what they are worth when compared with each other.  If you are from the USA and are travelling to Europe you will get less euros back than you had in US dollars as the euro is currently worth more than the US dollar.  The way the amounts are worked out on the forex is very complicated and is effected by many factors.  The currency market prices fluctuate all the time throughout the day. 

Being able the trade the Forex Market online happened around 1996.  Trading relies on currency pairs as you need to compare two currency prices, as in the example above with the US dollar and euro.  Although I used those in my example, the top traded pairs are the EUR/USA and GBP/USD.

The Most Traded Currencies in Order are:

1. United States dollar (USD $)
2. Euro (EUR €)
3. Japanese yen (JPY ¥)
4. British pound sterling (GBP £)
5/6. Swiss franc CHF and Australian dollar (AUD $)