While forex used to be the domain of large financial institutions and super-wealthy individuals, people can now get involved with as little as a few hundred dollars in capital. Investing in forex used to be the exclusive preserve of an elite group of hedge funds, investment banks and multinational corporations. For individual investors the FX market has been effectively off-limits; there were a lot of complex legal documents to sign before a bank would consider trading with you.
Trading forex is a relatively new asset class for the general public and has only really become possible for most of us since the late 90's when many of us started getting the internet connected at home. Since broadband connections became standard practice a huge number of people have had all the technical requirements they need to start trading forex - just open an account online and they can trade with the click of a mouse.
While currency prices are what the market is all about, interest rates have a direct effect on those prices. Therefore to be able to understand the current foreign exchange market you have to understand the current conditions of each individual interest rate. While economic and political conditions are also among the things that greatly affect the forex market there is nothing that affects it more than interest rates.
Risk appetite flickered back into life in financial markets on Tuesday with the dollar and European and Japanese shares rising while safe-haven bonds, the yen and gold all took a step back.
The concept of buying and selling capital can be initially confusing because you're not buying any asset in exchange for money like you do in the stock market for example. Instead you are simultaneously buying one currency and selling another that is doing an exchange. In the stock market traders buy and sell shares; in the futures market traders buy and sell contracts; in the forex market traders buy and sell "lots". When you buy a currency lot you are speculating on the value of one currency compared to another.