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Forex trading, short for foreign exchange trading, involves exchanging currencies. Companies and individuals exchange currencies to obtain the local currency of the country they are dealing with. This exchange of large amounts of currency can affect the price, as demand for a particular currency increases. Exchange rates constantly fluctuate based on supply and demand. The price of a currency is determined by the law of supply and demand, with higher demand leading to an increase in price. Exchange rates are always changing due to the ongoing exchange of currencies worldwide.