Most foreign exchange transactions are between pairs of the currencies of the 10 nations that make up the G10. The nations and their currencies include the U.S. dollar (USD), the Euro (EUR), the pound sterling (GBP), the Japanese yen (JPY), the Australian dollar (AUD), the New Zealand dollar (NZD), the Canadian dollar (CAD), and the Swiss franc (CHF).
Most brokers allow customers to trade in other currencies, including those of emerging markets.
Using a forex broker, a trader opens a trade by buying a currency pair and closes the trade by selling the same pair. For example, a trader who wants to exchange euros for U.S. dollars buys the EUR/USD pair. This amounts to buying euros using U.S. dollars.
To close the trade, the trader sells the pair, which is equivalent to buying U.S. dollars with euros.
If the exchange rate is higher when the trader closes the trade, the trader makes a profit. If not, the trader takes a loss.